Robinhood Raises $200 Million in Series G Funding Round

Robinhood, the popular stock trading app declared that it raised a $200 million Series G funding round from a new investor, D1 Capital Partners.

By · Aug 18, 2020 . 6min read

RobinHood raises funding

On Monday, the popular stock trading app, Robinhood declared that it raised a $200 million Series G funding round from a new investor, D1 Capital Partners. According to Robinhood, the funding series values the startup at $11.2 billion, after it raised $200 million from D1 Capital Partners. It noticed a notable rise from the $8.6 billion valuations it got last month when it raised $320 million. Robinhood has taken the brokerage industry by storm with its development. This declaration comes amidst analysts exploring how the company makes money. 

The company intends to hire hundreds of new registered financial services representatives for its Southlake, Texas, and Arizona offices. It is also recruiting new staff across all offices to reduce response time and enhance educational tools. The company’s founders have long pledged to seek an IPO. Additionally, Robinhood has arrived on various lists of startups supposed to go public this year. Still, the company has not offered specific details of these plans.

“We’re proud that more people than ever are using Robinhood to learn how to invest and manage their finances,” Vlad Tenev, co-founder and co-CEO of Robinhood, said in a statement.

Robinhood’s Operation and Sources of Income

Founded in 2013, Robinhood has taken the brokerage industry by storm. It offers zero-commission trades and relying on a slick mobile interface. In the truancy of revenue from commissions, Robinhood depends massively on producing income from “payment for order flow.” It is a dubious practice that includes marketing blocks of consumer orders to market makers like Citadel Securities. Some analysts say such arrangements are an injustice to consumers. However, some observers have made the case that payment for order flow can profit retail investors. It provides them with more favourable prices.

In any case, the practice has proved profitable for Robinhood, securing the startup $180 million in the Q2. However, Robinhood makes money in several other ways, apart from payment received from order flow. It includes subscription income from its premium Robinhood Gold product, interest on cash in lending stock, customers’ accounts, and fees from its debit card.

Additionally, Robinhood has set new importance on educating investors on its platforms. It helps to prevent consumers from making impulsive decisions. The company emphasized that the number of consumers utilizing its educational Resources page had grown by 250% in recent months.

The company did not offer any specific plan on how it will use the new $200 million in funding. However, it elucidated that the money will be used to enhance its products and consumer experience. With Robinhood planning to launch, we are ecstatic to see how it transforms the brokerage industry.

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