As consumers are growing wise to the diminishing potential of their savings in the midst of an economic downturn, more and more will look to investing and exchange traded funds (ETFs) to supplement their income. Trade Republic, the European trading platform equivalent of Robinhood, has become one of the most valuable fintech startups in Europe after a recent funding round.
The pandemic saw a rise in retail investors which has bolstered the relevance of trading platforms - especially ones that follow a zero-commission model such as Robinhood and Trade Republic. Instead of charging commission, Trade Republic only charges a flat fee of 1 euro per trade.
The Series C round of investment was led by Sequoia with participation from new investors TCV and Thrive Capital, as well as existing shareholders Accel, Founders Fund, and Creandum, among others. The round raised $900 million which sees Trade Republic’s valuation go up to $5.3 billion. Following this round of funding, the Berlin-based startup is now one of the largest privately held fintech start-ups in the region.
Unlike Robinhood, Trade Republic is a fully licensed bank having secured a banking license from German regulators in late 2018. A key part of co-founders Christian Hecker, Marco Cancellieri, and Thomas Pischke’s strategy for the company was to instill trust in its consumers by being a bank-backed fintech. Reiterating this, Hecker shared with CNBC, “If you want to be the home screen app for wealth, it feels like you should not put your money into somebody who is not a bank… We’re regulated in the same way as any other bank in Europe. On top of that, we’re independent.” This alongside being on the right side of the pandemic has enabled the company’s impressive growth in the past year.
Trade Republic seeks to democratize trading and has set itself up as an alternative savings plan, more than a trading broker. It allows its users the ability to trade stocks and ETFs, with cryptocurrency recently added also. To date, Trade Republic has over 1 million users, 400 employees, and 6 billion euros in assets under management in only three regions - Germany, Austria, and France. Its users are earning up to 20-30% of their salaries or savings on a monthly basis. This success, and the recent funding, will be channeled to further expansion of regions, with London on the near horizon.
With the democratization of financial markets said to be one of the most important trends of the next decade, companies like Trade Republic are well placed to come ahead as leaders in the market and the added security of its banking license is a key determinant in its success.
