Our perspective

Congratulations to Robinhood, the Company That Created a New Generation of Investors

CapitalG
06 Jul 2021
https://lh3.googleusercontent.com/wyVnVuonepODjNo_E72zAQGujIpWAmRRqAwmw-pQHS7TyLBo0kH8myKTyn3_gNpM3BuFGq2ywqmUY9qYSwMe6eFY180Zerzoqm0dG8zFf1CfMsMBxA

Huge congratulations to Vlad, Baiju and the entire Robinhood team as they become a publicly traded company.

By CapitalG investors David Lawee and Sumi Das

When we first met Before they created Robinhood, existing brokerages had primarily focused on wealthy investors with liquid assets north of $100,000. Inspired by the Occupy Wall Street movement, Vlad and Baiju wanted to democratize finance by making it easy for regular people to become stock market investors. By the time we reconnected in 2018, they had executed several bold innovations that were already transforming the brokerage industry, including:

- The first mobile-first investing experience that was simple and intuitive for everyday users.

- A commission-free business model that allowed users to trade at dramatically lower values than had ever been possible before.

- A unique community-led approach to user acquisition, including an innovative stock-referral program.

The company’s inventiveness led to rapid user growth. By 2018, Robinhood had acquired ~2M funded accounts almost entirely through organic word-of-mouth growth. By every measure, these users were highly engaged in terms of trading activity and time spent interacting with the product. Most impressively, 50% of them had never had a brokerage account before. True to its mission, Robinhood was expanding the market for investing.

Excited by the company’s progress, we invested in their Series D round. Given our thesis-driven approach, we typically spend months researching and predicting the ways that technology can transform industries and lives. At that point, we already knew that the bank and brokerage models were ripe for disruption, and we were looking to invest in a company which shared that belief.

Since our investment in 2018, we’ve been blown away by the Robinhood team’s ability to hyper-scale. In just three years, the company has grown to ~22.5M funded accounts and more than $80B of assets under custody. Additionally, it has continued to drive unprecedented innovation in the space, growing from an equities-only platform to one that enables the trading of options, cryptocurrencies and fractional shares, has launched a cash management account, and has built its own trade clearing infrastructure. Robinhood has truly enabled a new generation of investors to access the market.

Driving change in financial services is unusually difficult, and the Robinhood journey has not been without its challenges. As the company continues to mature, we’re excited to see how the founders have expanded their leadership team with experienced leaders at every level of the organization. On a personal note, we were elated when CapitalG partner Gretchen Howard joined Robinhood as COO in late 2018. Gretchen had already built an amazing career at Fidelity, Google and CapitalG and is a world expert in scaling high-performing technology companies. As it has grown into the market leader it is today, Robinhood has benefitted greatly from her adroit leadership and managerial skills.

We’re grateful to stand alongside Vlad, Baiju and the Robinhood team on their growth journey, and are excited for the many milestones that lie ahead.

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