In this photo illustration, a Robinhood Markets logo is displayed on a smartphone.
Rafael Henrique | SOPA images | LightRocket via Getty Images
Venture capital investors are betting big on Robinhood this year with pandemic-plagued years when people sitting at home, especially younger investors, jump into trading with a stock experiencing the fastest bear market and recovery in Wall Street history .
The trading start announced on Monday a financing round of $ 200 million, Series G – its third major investment in just five months. The new cash injection increases Robinhood’s valuation to $ 11.2 billion, an increase of almost $ 3 billion.
The latest investment comes from a new backer, New York-based D1 Partners, just a month after Robinhood closed another round of the late stage. In July, Robinhood said it added $ 320 million investment to a previous series of financing, which were announced in April. That had raised his valuation to $ 8.6 billion. D1 joins high-profile Robinhood investors such as Sequoia, Kleiner Perkins and Google’s venture capital arm, GV.
The flurry of venture capital cash comes in a historic year for the U.S. stock market and a period of high growth for brokerage firms. Robinhood and its publicly traded peers, such as TD Ameritrade, Charles Schwab and E-Trade, saw record customer growth in 2020, helped by enthusiasm from new retailers such as Tesla and Virgin Galactic. After entering a bear market in March, the S&P 500 was again strikingly far from its February 19 record high this week.
Robinhood said it traded 4.3 million daily average earnings, as DARTs, in June, better than any publicly traded, committed broker. Robinhood’s DARTs in the second quarter more than doubled compared to the previous three months, according to the company. It also added 3 million new customer accounts in early 2020.
Robinhood’s turnover has increased in addition to trading volume. It roughly doubled the money it makes from customer trading from the previous quarter, according to a recent SEC regulatory filing. The majority of that total came from options trading.
This year’s success has also brought growing pain. Robinhood saw multiple days of outages in March, leaving some customers unable to trade for the markets in a historic day. It assigned you, in part, to record trading volume and volatility. The startup also made it more difficult to access its options offered in the wake of a customer’s suicide.
Along with the boom of trade, Robinhood said on Monday that they are seeing evidence “people are taking time to learn more about the markets” with average unique daily visits to the company’s educational resources based on investing more than 250% since January.
The Menlo Park, California-based start-up offers stock, cryptocurrency and options trading, as well as cash management accounts. Robinhood offers most trades for free and makes money from stream of customers and a premium, paid subscription service, but declined to say if it was profitable. The average age of clients is 31.
Robinhood said the final round of financing would go toward investing in its core product, and “customer experience.”
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