Unlike the other major brokerages, Robinhood gives younger users with less disposable income the opportunity to buy & sell stocks without a minimum initial investment & without charging commissions. Launched in 2013, Robinhood keeps overhead low by relying solely on mobile apps to enable stock trading instead of brick-and-mortar locations & employed trading staff.
Robinhood enables even novice investors to research and monitor stocks all in-app—albeit, nowhere as robust an offering as provided by competitors like E*Trade. Still, the $0 price point and no minimum is appealing when compared to the $7.99-$9.99 commissions + $2500 minimums + $14/month charges that several key competitors charge.
Until last year, Robinhood’s only revenue stream was the company’s own investment of user’s funds placed in their accounts but not yet used for stock purchases (or left there after stock sales); however, in September, the company introduced Robinhood Gold, their $10/month premium option. With Gold, users can skip the three-day waiting period for trading when depositing new funds into their accounts, and also have the option of borrowing up to double their account value for margin trading.
Robinhood’s latest fund-raising effort is being led by DST Global, which invested in companies like Facebook, Twitter, and Groupon before they each went public. Previous investors in Robinhood include Jared Leto and Nas, Andreessen Horowitz, & Index Ventures.