Robinhood Valuation Soars to $8.0 Billion, Adding $250M to Quiver

Robinhood is negotiating to raise new funding from Sequoia Capital, one of Silicon Valley's biggest venture investors

Robinhood could be valued at $8.0 billion in case the free stock-trading startup manages to close its most recent, late-stage funding round.

According to a Bloomberg report, the California-based company is negotiating to raise $250 million in new funding led by Sequoia Capital, one of Silicon Valley’s biggest venture investors. However, a final deal hasn’t been reached and might not be, the sources said.

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Robinhood’s most recent funding came from a $323 million Series E round led by DST Global and other venture capital firms, including Sequoia. At the time, in July 2019, the deal had put its valuation at $7.6 billion, up $2 billion from its Series D valuation in 2018.

The number of user accounts on the commission-free investing app has exploded to more than 10 million by the end of 2019. The six-year-old startup has been growing at an explosive rate, and the number of brokerage accounts on its platform is double than it was a year ago.

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However, a fair number of its users were frustrated with trying to figure out how they fared during the first week of March 2020. Clients have complained about not having access to their accounts and having long wait times for customer service.

The impressive metrics mean that the New York startup has been able to bring on nearly as many customers as TD Ameritrade, which onboards 11 million users 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, with an annualized new account growth rate of seven percent.

Six years after Robinhood launched with no-fee trading, major brokerages were catching up with a wave of fee-eliminating announcements over the past two months. In the span of just a few weeks, nearly all US online brokers eliminated commissions, which could be a direct hit to the startup that kicked off the trend in 2013.

Robinhood’s offering is particularly popular among the “millennial” population, who appreciate the ease of using the app to trade several asset classes without fees. The company also unveiled plans for a bank account-like feature that will pay customers 2.05 percent interest and offer a no-fee debit card service.

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