(Reuters) 02/01/21- Online broker Robinhood has raised more than $1 billion of fresh capital from existing investors, having been strained by high volumes of trading this week and raising the ire of customers, celebrities and politicians for curbing the purchase of some hot stocks.
Robinhood’s existing investors include venture capital firms Sequoia Capital and Ribbit Capital, who came together on Thursday night to offer the emergency funding, according to a New York Times report.
Reuters could not immediately verify if Sequoia and Ribbit helped with the emergency infusion.
“We’re pleased to share that we’ve raised over $1 billion from existing investors to continue to invest in record growth. This is a strong sign of confidence from investors that will help us continue to further serve our customers,” a Robinhood spokeswoman said in an email.
The firm has also tapped a credit line so that it has funds to ensure trading continuity when it lifts the rules.
The latest funding comes at a crucial time for Robinhood, which is also preparing for a high-profile initial public offering this year. Recent developments raise questions on whether the company will push forward with those plans.
Reuters was first to report in December that Robinhood had picked Goldman Sachs Group Inc to lead preparations for the IPO, which could come this year and value it at more than $20 billion.
In an interview with CNBC on Thursday, Robinhood founder Vlad Tenev declined to comment on the IPO plans and said … “will only say Robinhood is well capitalized and have a great growth opportunity ahead of us.”
Robinhood’s fee-free and simple-to-use app has made it popular with a new generation of small-time traders and its restrictions on Thursday drew a heavy backlash from high-profile politicians and celebrities.