A start-up that offers a stock and cryptocurrency trading app that charges no transaction fees just announced another round of venture funding. Robinhood LLC raised $363 million at a valuation of $5.6 billion. DST Global led the series D round with Iconiq, Kleiner Perkins, Sequoia, and Capital G participating.
When the company raised $110 million in April 2017 in its series C round, the company was valued at around $1.3 billion. The number of users has doubled to 4 million in the same period. The big difference in valuation is due in part to Robinhood’s commission-free cryptocurrency trading feature launched last February.
Cryptocurrency trading on Robinhood’s platform was available in only five states at launch and another five were announced in connection with the announcement of the new funding. Cryptocurrency trading is licensed on the platform in these 10 states: California, Massachusetts, Missouri, Montana, Colorado, Mississippi, Wisconsin, New Mexico, Florida, and Michigan.
On the Robinhood blog the company said it plans to use the money to accelerate product expansion, invest in infrastructure and operations, and hire more “world-class talent.”
CEO Vlad Tenev told Techcrunch:
It’s the only place right now where you can trade crypto, stocks, and options all in one place. For us to construct an experience that feels seamless and natural for customers, that for example want to sell an equity and use the proceeds to buy crypto, seamlessly, that’s been challenging not just from a product and design standpoint, but also infrastructure standpoint. There’s complexity under the hood, and our goal is to make it as seamless as possible in the process and make that complexity go away.
Against expectations, perhaps, frequent traders are not big users of Robinhood, which also developed a web-based version of its trading software and offers options trading along with premium services such as Robinhood Gold. Tenev commented:
Most of our customers engage in more of these buy and hold accumulation strategies. We really see a lot of unique things because we don’t charge trading commissions. There are customers that deposit money regularly twice or once a month and then buy stocks as soon as those deposits come in.
The company is looking to expand its cryptocurrency trading service in all 50 states by the end of this year.