By Tom Metcalf and Julie Verhage
It took decades for Wall Street titans Jamie Dimon and Lloyd Blankfein to become billionaires. Baiju Bhatt and Vlad Tenev did it in a Silicon Valley minute.
The Robinhood Markets Inc. co-founders achieved that milestone after a recent funding round for the electronic stock brokerage pushed its valuation to about $6 billion, up from $1.3 billion last year. Bhatt, 33, and Tenev, 31, together own about a third of the company, or $1 billion each on paper, according to an analysis by EquityZen, a marketplace for shares in pre-IPO technology companies.
Jack Randall, a spokesman for Palo Alto, California-based Robinhood, declined to comment.
Both are sons of immigrants, raised in rural parts of the U.S. before attending Stanford, where they met. Their first venture together was a hedge fund, but after observing the Occupy Wall Street movement up close and taking note of the populist outrage over income inequality, they decided to start a platform that lets users trade for free. The company said its users have saved more than $1 billion in commissions.
The online stock brokerage had a rough start, with more than 70 investors demurring before Robinhood got its first check, but things have taken off since. Just four years after the first trade was executed, more than 4 million consumers have opened accounts, surpassing E*Trade Financial Corp.’s 3.7 million.
The soaring valuation may partly reflect a frothy environment for private technology companies. The Bloomberg U.S. Startups Barometer has almost doubled in the past year as investors, including Masayoshi Son’s $100 billion Vision Fund, hunt for opportunities. That has stoked some concerns that valuations are unsustainable.
“Hypercompetition has made it so that the majority of venture capitalists’ biggest fear is missing out on the next investment,” Bill Gurley of Benchmark, which has invested privately in the likes of Uber Technologies Inc. and Snap Inc., said in a February interview with Bloomberg TV.
The latest funding round brought in Sequoia Capital, Kleiner Perkins Caufield & Byers, Iconiq Capital and Alphabet Inc.’s growth fund CapitalG. Previous investors include DST Global, Index Ventures and New Enterprise Associates, along with celebrities like Ashton Kutcher and Snoop Dogg.
This article was provided by Bloomberg News.