The Menlo Park-based Robinhood entered the crowded trading arena in 2013 with a mobile app that lets users buy and sell U.S. stocks and ETFs without any trading fees. The platform is especially attractive to less-wealthy millennials who are interested in investing but can’t afford to spend $7 to $10 per trade with firms like E*trade or TD Ameritrade. For users that can afford a little extra service, the company launched Robinhood Gold, a premium paid service for experienced investors that offers margin and extended-hours trading. It’s priced at $5 per month. Co-founders and co-CEOs Baiju Bhatt and Vlad Tenev were former classmates at Stanford University. Before launching the company, they ran two other firms selling trading software to hedge funds.
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Robinhood had a little hiccup last year when it tried to branch out into personal banking with a service called Checking & Savings offering an eye-popping 3% interest rate on accounts. After the news about the product was released on its website, the company had to walk it back after questions arose about how the money would be insured and if deposits were protected. The Federal Deposit Insurance Corp. protects deposits up to a certain amount at traditional banks, but Robinhood announced that the FDIC would not be insuring its deposits. In April, however, the company announced it had filed an application to open an FDIC-insured online bank to accept deposits and offer lower interest rates on credit cards. It’s unclear when — or if — the application would be approved.
Over the past year, the company has grown to 6 million customers. It’s raised a total of $539 million and is valued at nearly $6 billion. Though Robinhood’s Bhatt has confirmed plans for an IPO, an exact date has not been released.