Robinhood is pushing the tipping point of fintech innovation
February 25, 2021

Robinhood is pushing the tipping point of fintech innovation

Forge Team

The financial services industry has been disrupted by technology from nearly every angle over the past decade – from mobile payment and cash flow transaction apps to cryptocurrencies and robo advising. The disruption du jour we’re all witnessing now: stock trading and investment apps.

Trading and investing had been relatively inaccessible to a large portion of the population, particularly Millennials and particularly those without investing experience or hoards of cash to burn. But Robinhood, the commission-free investing app, has been dismantling the perception that Millennials and investing don’t mix, with technology that brought unprecedented flexibility and access to the market beyond financial institutions and accredited investors.

The Reddit-induced GameStop stock surge showed just how powerful Robinhood’s platform is at engaging a new generation of traders. Despite the market chaos that ensued, Robinhood continues to navigate its way through the quasi-crisis, which meanwhile continues to boost the company’s recognition as a powerhouse private brand. Investor interest in Robinhood soared on the Forge private marketplace in January even as the company raised emergency funds from its existing investors to build its cash reserves. In its last two funding rounds alone, the company raised a total of $3.4B, which just stoked the fires of private market investors who posted record-high interest for private shares through the platform.

With user-friendly technology, and loads of easily accessible information at everyone’s fingertips, Robinhood is just one of a class of startups fueled by an entirely new audience of investors who don’t seek the help of traditional institutions for their investment decisions and don’t generally play by the old rules governing investing. This democratization of the investing paradigm, as Robinhood and the GameStop saga has shown, will only lead to more innovation, as entrepreneurs figure out how to better serve this new, powerful investment class.

Innovation amplified by the pandemic

And that will have implications on the fintech sector as a whole. Fintech innovation piqued this year, due in part to behavioral changes stemming from the Coronavirus pandemic. Robinhood leverages behavioral psychology and gamification, for example – it’s fun and easy to use, making its app particularly appealing for those who, in non-pandemic times, might otherwise spend time, money and energy engaging in activities like sports and entertainment betting. A better UX has sparked curiosity in the new league of investors, too. TD Ameritrade reported last fall that visits to its website giving instructions on trading stocks have nearly quadrupled since January 2020.

Advancements in fintech will only continue to increase access and provide greater options for stock trading and investing, among other financial decisions, for the new generation of traders and the savvy professionals.

Speaking of the professionals, per the interest in Robinhood on the Forge platform, as bids for Robinhood shares continue to mount, that interest is split between accredited individual investors and institutional investors.

While GameStop squeezed some hedge funds that had shorted the stock, it’s also possible that hedge funds see a way to benefit from the very same company that caused their losses – by working to buy up available Robinhood equity in the private markets. This “even if we lose, we’ll win” strategy is another potential ripple in the way that the new fintech disruptors will ultimately influence the traditional investment models.

Robinhood shook the market and changed the way investors think about and approach buying. As more companies follow Robinhood’s lead, we can expect more interest in fintech disruptors on the private markets. Learn how to become an accredited investor on the Forge marketplace here.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

The information and material presented in this article is provided for your informational purposes only and does not constitute an offer by Forge Global, Inc. Forge Securities LLC or any of its affiliates (collectively, "Forge") to sell, or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of final offering document(s) and purchase agreement and will be subject to the terms and conditions and risks delivered in such documents.

This article does not constitute an offer to provide investment advice or service. Registered representatives of Forge Securities LLC do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services. Securities referenced in this article may be offered by Forge Securities LLC, member FINRA/SIPC.

Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Certain affiliates may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

Register to Get Started
Please provide your first name.
Please provide your last name.
Please provide a valid email address.

By registering, you agree to the Forge Terms of Use. Already registered? Click here to log in

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

The information and material presented in this article is provided for your informational purposes only and does not constitute an offer by Forge Global, Inc. Forge Securities LLC or any of its affiliates (collectively, "Forge") to sell, or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of final offering document(s) and purchase agreement and will be subject to the terms and conditions and risks delivered in such documents.

This article does not constitute an offer to provide investment advice or service. Registered representatives of Forge Securities LLC do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services. Securities referenced in this article may be offered by Forge Securities LLC, member FINRA/SIPC.

Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Certain affiliates may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.