Half a million people have already signed up for Robinhood‘s unlaunched zero-fee stock trading service. Now the startup has raised $13 million to hire talent to make its app totally secure so it can start adding people from its private beta waitlist.
Unlike competitors E*Trade and Scottrade that charge people $7 to $10 per trade, Robinhood doesn’t need to spend money on brick-and-mortar outposts and some fancy castle on Wall Street. Instead, the hope is that the Series A led by Index Ventures will substitute as a source of confidence in Robinhood’s longevity. Robinhood aims to make people comfortable storing money and trading stocks with the app it hopes to publicly launch in early 2015.
“We’re making investing accessible to young people,” says co-founder Vlad Tenev (Vlad and his co-founder Baiju Bhatt are friends from college). “Most stock brokerages out there have been around for 30 years, their interfaces are clumsy, and they’re targeting older professionals and active traders. They’re no place for first time investors and that’s one of the things we focus on. Making it accessible. Having it be mobile friendly.”
Tenev and Bhatt are serial financial technology entrepreneurs, having launched companies in algorithmic trading and investment bank software. While working on Wall Street in 2011, they saw the 99% movement first-hand, and devised an app to allow anyone to get involved with stocks. “It all comes back to the name” Bhatt says with real emotion in his voice. “We ask ourselves, ‘if we were to use a financial service that called itself Robinhood, what would we expect it to do?’”