(Corrects date of Robinhood Gold launch to September 2016, not
earlier this month, in 6th paragraph.)
By Anna Irrera
NEW YORK, April 26 Commission-free trading
startup Robinhood has raised $110 million in a round led by
Russian billionaire Yuri Milner's investment group DST Global,
valuing the company at $1.3 billion.
Greenoaks Capital and Thrive Capital, the venture capital
firm founded by Josh Kushner, also invested, the company said on
Wednesday. Kushner is the brother of Jared Kushner, a senior
adviser and son-in-law to U.S. President Donald Trump.
Existing investors Index Ventures, NEA and Ribbit Capital
participated in the round, which brings the total raised by the
startup to $176 million.
Palo Alto-based Robinhood allows retail investors to buy
U.S. stocks and ETFs commission-free, through a user friendly
app. It competes with established brokerages such as TD
Ameritrade and E* Trade Financial Corp, which charge
clients for commissions.
It is part of a growing group of financial services
companies that take advantage of digital technologies to lower
their operational costs and target a younger generation of
While the company does not charge trading commissions, in
September it launched a premium paid account called Robinhood
Gold. The $10 per month account gives users added features, such
as the ability to borrow more money for margin trading and trade
before and after market close.
The company, which was founded in 2013, also makes money
from collecting interest from clients' deposits and from
benefits it receives for directing its order flow to certain
Baiju Bhatt, Robinhood's co-CEO and co-founder said that the
company had reached 2 million users and was launching a new
referral program to further boost its growth.
"The company is continuing to do well and the opportunity to
refinance the company was there so we took it," Bhatt said.
Robinhood plans to expand internationally, but had to slow
down some of its plans because of increased geopolitical
uncertainty, Bhatt said. He pointed in particular to the UK's
decision to leave the European Union.
Robinhood's funding round comes as traditional brokerages
face fierce competition to lower their fees. In February
Fidelity Investments Inc, Charles Schwab Corp and TD
Ameritrade made moves to slash their trading commissions.
(Reporting by Anna Irrera; Editing by Bernard Orr)