BENGALURU (REUTERS, BLOOMBERG) - Robinhood Markets, the fintech start-up credited with helping popularise trading among millennials, said on Monday (July 13) it has raised another US$320 million (S$445.9 million) in latest funding from new and existing investors at a valuation of US$8.6 billion.
The new round includes investors such as TSG Consumer Partners and IVP, and brings the seven-year-old fee-free trading app's total fundraise to US$600 million in a span of two months. Robinhood plans to use the money to hire more employees, build new products and improve operations, it said in a blog post.
The funding round is widely being seen as a precursor to an initial public offering, according to analysts tracking the company, which has benefited from a surge in day trading, driven by consumers stuck at home during the Covid-19 pandemic.
Some traders and analysts have attributed rallies of between 300 per cent and 500 per cent in stocks of bankrupt or soon-to-be-bankrupt companies such as Hertz, Chesapeake, Whiting and JC Penney to retail investors using Robinhood, which has more than 10 million users.
Robinhood's climbing price tag makes the fee-free trading app one of the most valuable start-ups in the country. Its small army of inexperienced traders have also become an at-times unpredictable force on Wall Street. In May, the company had already added more than three million new accounts over the course of the year, it said in a blog post, and added that half of its new customers were first-time investors.
The company, however, has been criticised for not doing enough to moderate excesses that even led to a suicide. Last month, a 20-year-old Robinhood user killed himself after his account temporarily showed a negative balance of more than US$700,000. After the man's death, Robinhood said it would change its options trading platform to offer more education and made a US$250,000 donation to the American Foundation for Suicide Prevention.
The start-up has also experienced several outages since early March, particularly on days of high trading volumes.
