{"id":337341,"date":"2017-04-01T06:33:10","date_gmt":"2017-03-31T22:33:10","guid":{"rendered":"http:\/\/techcrunch.com\/?p=1471648"},"modified":"2017-04-01T06:33:10","modified_gmt":"2017-03-31T22:33:10","slug":"robinhood-stock-trading-app-valued-at-1-3-billion-with-big-raise-from-dst","status":"publish","type":"post","link":"https:\/\/people.utm.my\/asmawisham\/robinhood-stock-trading-app-valued-at-1-3-billion-with-big-raise-from-dst\/","title":{"rendered":"Robinhood stock trading app valued at $1.3 billion with big raise from DST"},"content":{"rendered":"

<\/p>\n

Zero-fee stock trading app Robinhood<\/a>\u00a0is completing a huge fund raise to fuel its attack on old brokerage firms that charge around $7 to $10 per trade. According to sources, the round is led by Yuri Milner investment vehicle DST Global and values the company at $1.3 billion. Robinhood declined to comment.<\/p>\n

Robinhood got its start in 2013 by offering a way for younger, less-wealthy users to start investing. It provides an easy-to-use app for free tracking and trading of stocks<\/a>. Robinhood replaces the traditional brokerages like\u00a0Scottrade and E*Trade which charge per trade to cover their brick-and-mortar franchise, sales staff and marketing spend.<\/p>\n

Because Robinhood instead employs a leaner engineering-focused team and doesn\u2019t need physical locations, it can pass the savings on to customers and undercut competitors by charging no per-trade fee.<\/p>\n

\"\"<\/p>\n

Robinhood founders Baiju Bhatt (left) and Vladimir Tenev (right)<\/p>\n<\/div>\n

Robinhood has since built a platform that allows other developers to offer zero-fee trades in their own apps. Last year, it launched its primary revenue stream, a\u00a0$10 per month premium Robinhood Gold option<\/a>.\u00a0That allows users to skip the three-day waiting period for deposits and make trades instantly, as well as borrow up to double the amount of money in their account to trade on margin with leverage.<\/p>\n

Sources say Robinhood Gold has sold better than expected, which likely gave it the momentum for this big raise as investors seek to \u2018pour gasoline on the fire\u2019. Robinhood\u2019s status was further bolstered by the fact that established brokerage Charles Schwab reduced its fees in February.<\/p>\n

At the time, the startup issued a statement that \u201cWe\u2019re happy to see Charles Schwab lower its commission fees. Ideally, they would have eliminated them altogether, along with the required $1,000 account minimum. At Robinhood, we view commission fees as arbitrary mark-ups like taxes, which discourage participation in the financial markets.\u201d<\/p>\n

Robinhood will have to continue to minimize fraud rates that could threaten its finances. It will also have to jump plenty of regulatory hoops to expand further abroad. It\u2019s made in-roads to China through Baidu, though that will still be a tough market to crack from the outside.<\/p>\n

\"\"<\/p>\n

Comparative pricing chart for stock brokerages as of September 2016<\/p>\n<\/div>\n

Earlier today, Fortune reported<\/a> that Robinhood was seeking a round of financing valuing it at more than $1 billion. Sources tell us that the deal is essentially done, and was led by DST Global, which put in money at a $1.3 billion pre-money valuation.<\/p>\n

DST is best known for its investments in companies like Facebook, Twitter, Groupon and Zynga in the years leading up to\u00a0those companies going public. Since then\u00a0the firm has been quieter but no less active, as it continues to fund high-growth\u00a0later-stage companies.<\/p>\n

\"\"<\/p>\n

Most recently, Robinhood raised $50 million from New Enterprise Associates in early 2015. Prior to the DST investment,\u00a0the company had raised $66 million<\/a>\u00a0total, with previous investors including Index Ventures, \u00a0Andreessen Horowitz, Elefund,\u00a0GV,\u00a0IT Ventures, LocalGlobe and Machine Shop Ventures, as well as angel investors Aaron Levie, Dave Morin, Howard Lindzon, Jared Leto, Jordan\u00a0Mendell and Nasir \u201cNas\u201d Jones.<\/p>\n

DST and other investors may see outdated brokerages which haven\u2019t swiftly adopted mobile technology as running scared. Unless or until they approach Robinhood\u2019s $0 price point, the startup has an opportunity to steal their customers while recruiting new ones who aren\u2019t rich enough to afford the traditional fees.<\/p>\n","protected":false},"excerpt":{"rendered":"

\"\" Zero-fee stock trading app Robinhood has added to its coffers, raising another big round of funding. According to sources, the round was led by Yuri Milner investment vehicle DST Global and values the company at $1.3 billion dollars. Read More<\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

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