European Robinhood rival Trade Republic raises $900 million of funding

The commercial republic app.

Commercial republic

LONDON – German stock trading app Trade Republic announced Thursday that it had raised $ 900 million in a massive round of funding that valued the startup at $ 5.3 billion.

The round, a Series C, was led by American venture capital company Sequoia, which was additionally supported by new investors TCV and Thrive Capital. Existing shareholders include Accel, Founders Fund and Creandum, who have increased their holdings.

The trade republic is essentially Europe’s answer to Robinhood. The app allows users to trade stocks and exchange-traded funds with no commission. Trade Republic makes money with a flat fee of 1 euro per trade.

Earlier this year, Trade Republic added a cryptocurrency service that introduced the feature when the prices of Bitcoin and other digital coins rose sharply. More recently, the crypto markets have seen a sharp downturn.

Like Robinhood, Trade Republic has benefited from rising retail investor interest in the stock market. Earlier this year, online trading platform usage increased due to volatile trading in GameStop and other stocks advertised on the Reddit board WallStreetBets.

Unlike Robinhood, however, Trade Republic is a fully licensed bank. The company received its banking license from the German supervisory authorities at the end of 2018. Co-founder Christian Hecker says the company went this route as it gives people the confidence to trade with an aspiring broker.

“If you want to be the home screen app for wealth, you shouldn’t put your money in someone who isn’t a bank,” Hecker said in an interview with CNBC. “As a regulated bank there is a lot of trust. We are just as regulated as any other bank in Europe. In addition, we are independent.”

The trading republic is not well known beyond its core markets of Germany, France and Austria. Founded in 2015, the company decided to grow its business secretly in the first few years. Hecker and his other co-founders lived together in Airbnb apartments while building the company.

Meanwhile, Trade Republic has grown to more than 1 million users, 400 employees and assets under management of 6 billion euros. The company now plans to roll out its service in all Eurozone countries over the next 12 months.

Hecker said he was “very concerned” about the threat of negative interest rates and rising inflation in Europe. More Europeans are flocking to the financial markets as they struggle to get an adequate return on their savings.

The recent cash injection makes Trade Republic one of the most valuable fintech start-ups in Europe. The continent’s tech sector has grown dramatically over the past decade, and 2020 was a record year for investing in European startups.

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