Commission-Free Trading App Robinhood Drives Explosive Growth, Raises Series B
Over 800,000 people waited for months before getting this company’s official invite to join this past March. Over $500 million has been transacted so far through the platform and over $12 million in commissions have been saved. Their average user is 26 and new to managing an investment portfolio online (or anywhere, for that matter).
If you haven’t yet heard of the investing app Robinhood, then you’re about to in a big way. The commission-free trading app is reshaping the brokerage industry and is arguably one of the most exciting new fintech companies out there. Now, we’ve already written quite a bit about Robinhood — first when we invested at the Seed level and then when we led a $13M series A round. And plenty has been said about tech companies unbundling banks, be it in regards to payments, wealth management, small business loans, currency transfers or property investments. But now, as we’re proudly taking part in their new Series B round led by our friends at NEA, I’m eager to share what makes Robinhood unique: namely, how it’s achieved its explosive growth faster than any other fintech company I’ve seen at Index since joining five years ago.
First, Robinhood founders Vlad Tenev and Baiju Bhatt designed a free and simple brokerage that targeted millennials like themselves. Though this generation is known to be fiscally conservative — only 12% recently said they would invest their money in the market — Robinhood has energized this group to rethink its perspective on trading online. Tenev and Bhatt also designed Robinhood to be mobile-only. After mocking up their first product in a Palo Alto garage in 2012, they realized that their product looked beautiful and didn’t need to be on a desktop. Their mobile focus translated into more engagements and more trades, expanding the industry. Finally, the duo strove to maximize the virality of the product — so much so, that the app’s growth amongst younger users reminds me of the early days of mobile gaming.
Like its namesake hero who is “feared by the bad, loved by the good,” Robinhood is all about democratizing a service for the masses and we’re excited about both their growth in the U.S. and their plans to bring their investing approach to new markets internationally this year — starting with Australia. (Robinhood will soon begin the regulatory process and announce specific launch timing later this year.) I’m proud to be spending time with these founders and look forward to continuing to support this team on their journey.