The company was founded by Vlad Tenev and Baiju Bhatt in 2013. Inspired by the anti-establishment spirit of the Occupy Wall Street movement, they said, they set out to make it easier for millennials to trade through an app.
Unlike traditional brokerages, the Robinhood app emphasized quick and easy trades to make and employed an element of fun, with confetti bursts for transactions, lottery scratch-off functions, and notifications for winnings calls.
The innovations attracted many millennials to the stock market for the first time, but market watchers said the app encouraged a game-like investment approach. Studies show that active trading generally leads to worse results for investors. In March, Robinhood announced that it would remove confetti from its app.
Still, the company turned out to be disruptive. In 2019, competing stock trading services, including Charles Schwab, TD Ameritrade, and E-Trade, reduced their fees to zero.
As users flocked to Robinhood, venture capital investors followed. The company has raised $ 5.6 billion in funding that valued it at $ 11.9 billion, according to Pitchbook. Its largest shareholders include Ribbit Capital, Index Ventures, New Enterprise Associates and DST Global.
Robinhood’s egalitarian spirit did not protect the company from attack during the GameStop fight. Clients accused him of siding with the great institutional Wall Street at the expense of ordinary people after he halted certain operations.
The shareholders of the company, however, stood their ground. In one week, he raised two rounds of emergency funds totaling $ 4.4 billion to meet loan requirements for stock trading and continue to trade.