Despite the multiple outages, investors continue to put money, and at a rising valuation, toward the no-fee investing app Robinhood. Announcing the new mega-funding on Monday, Robinhood has nabbed $320 million, at an $8.6 billion valuation. This was in a round led by previous investors as well as new backers, including TSG Consumer Partners and IVP.
Earlier in May, the popular app had landed an $8.3 billion valuation. This was after it raised $280 million in Series F funding.
The round was led by Sequoia Capital, one of Silicon Valley’s biggest venture investors. It was joined by returning investors, including NEA, Ribbit Capital, 9Yards Capital, and Unusual Ventures.
At the time, co-CEO Vlad Tenev said they had grown rapidly in 2020. They have gained three million funded accounts in the Jan-April period to amass more than 13 million users.
The Silicon Valley startup is mostly something millennials use to trade stocks and cryptocurrency. It said that in December 2019 it had hit a 10 million accounts milestone. That was up from its one million subscribers in 2016 and six million accounts in 2018.
Robinhood has Grown Despite Outages
The growth came despite significant outages that plagued the fintech since the start of 2020. Most recently, Robinhood reported technical issues that kept clients from trading equities and options on June 18. It also affected cryptocurrency trades.
The platform was also down for consecutive days during the first week of March and clients have complained. They were unable to access their accounts and had long wait times for customer service.
As such, part of the new funding round will certainly go to the improvement of its app’s infrastructure-related issues.
The New York startup has been able to bring in more customers than TD Ameritrade. The latter has 11 million users onboard and has been in the online brokerage industry since 1975.
One of Robinhood’s biggest competitors, E-Trade, had 4.9 million brokerage accounts at the end of 2019. That is with an annualized new account growth rate of seven percent.
Six years after Robinhood launched no-fee trading, major brokerages caught up with a wave of fee-eliminating announcements. This was over the past six months.
In a span of just a few weeks, nearly all US online brokers eliminated commissions. This could be a direct hit to the startup that kicked off the trend in 2013.
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