Tech

Robin Hood’s founder is worth more than $ 5 billion as FinTech IPOs build up

Vladimir Tenev and Baiju Bhatt co-founded Robinhood.

Mark Neuring | CNBC

Fintech casts millionaires every month.

Already this year, Coinbase co-founders have joined the billionaire ranks along with the founders of Affirm and Marqeta. Silicon Valley has been taking on the bank’s incumbent for years, promising a better customer experience, but emerging trading apps, payment startups and online lenders have achieved a large public market reputation. Is only now.

Now it’s Robin Hood’s turn.

Vladimir Tenev and Baijubat, Stanford University roommates almost 10 years ago, are each ready to be worth about $ 2.6 billion in paper when the trading app debuts on the Nasdaq later this month. It is based on $ 40, which is the midpoint of the company’s price range as stated in the IPO prospectus updated on Monday.

According to Filing, Robin Hood CEO Tenev and Chief Creative Officer Bart will each own 7.9% of the company’s outstanding shares. Each also sells about $ 50 million worth of stock.

This year is the flagship year of technology listings, with at least 12 companies publicly listed through IPOs, direct listings, or special purpose acquisition companies (SPACs) achieving a market capitalization of over $ 10 billion. Between these companies and several other low-rated companies, the technology industry cast 16 billion billionaires in 2021.

Fintech earns most of its profits.

Coinbase CEO Brian Armstrong has owned approximately $ 8.7 billion worth of crypto app stakes since its direct listing in April. Fred Yale Sam, who co-founded the company with Armstrong in 2012, owns $ 2.7 billion in shares. Marqeta CEO Jason Gardner is worth nearly $ 2 billion after launching his payment tech company last month. Meanwhile, Affirm’s Max Levchin owns more than $ 1.5 billion in shares in an online lender that went public in January.

Brian Armstrong, Founder and CEO of Coinbase, will attend Consensus 2019 at Hilton Midtown on May 15, 2019 in New York City.

Stephen Feldman | Getty Images

SoFi, a provider of college loans, mortgages and various investment and insurance products, was released through SPAC in June and is currently worth $ 12 billion, while individual owners own $ 1 billion in shares. not.

It’s still before you immerse yourself in a private company. According to the Bloomberg Billionaires Index, settlement company Stripe was valued at $ 95 billion in a March funding round and provided a total of $ 23 billion in shares to brothers co-founders Patrick and John Collison. Swedish settlement company Klarna is currently worth $ 46 billion in the private market. According to Forbes, Klarna CEO Sebastian Siemiatkowski has a net worth of $ 2.2 billion.

The list continues. Chime, which provides banking services via mobile phones, is worth $ 14.5 billion, and Plaid, which provides back-end technology that connects apps to bank accounts, has forced Visa to abandon its acquisition plans. After that, it’s worth $ 13 billion.

When the latest funding round was announced, Plaid CEO and co-founder Zach Perret said, “Our market is undergoing major changes and consumers who didn’t expect to embrace digital finance in a big way. There is. ” April.

Robin Hood said it plans to sell its shares for $ 38 to $ 42 per share ahead of its Nasdaq debut next week. This could value Robin Hood up to $ 35 billion from the $ 11.7 billion private market valuation in September.

Users flocked to Robin Hood in the first quarter as the volume of crypto trading surged and the popularity of meme stocks such as GameStop and AMC Entertainment led millions of new traders to the app. Robin Hood’s monthly active users at the end of March increased from 11.7 million at the end of 2020 to 17.7 million.

Robin Hood co-founder retains voting rights

Tenev, 34, and Bert, 36, have addressed the share of problematic headlines this year on their way to what is likely to be one of the biggest IPOs in 2021.

Increased activity has benefited Robin Hood’s earnings significantly, but the company had to stop trading GameStop and other equities in January as an unexpected surge in trading volume caused liquidity tightness. did not.

“We had to limit the purchase of these shares to protect the company and protect our customers,” Tenev told CNBC’s Andrew Ross Sorkin after the limits were put in place.

Robin Hood eventually raised $ 1 billion from investors to strengthen its balance sheet, but the incident cast doubt on the company’s business model, known as order flow payments. Robin Hood will allow users to buy and sell for free and will claim the right to execute customer transactions from market makers such as Citadel Securities and Virtu.

Financial industry regulators said in June that Robin Hood would pay a fine of approximately $ 70 million for system-wide outages and misleading communications and trading practices. The company faces dozens of proceedings, as well as investigations or investigations by regulators, state prosecutors, the SEC, FINRA, and the US Department of Justice.

In its first prospectus earlier this month, Robin Hood revealed that Tenev’s phone had been confiscated by a federal lawyer as part of the GameStop probe.

Still, the co-founders of Robin Hood, both members of the board, are in a position to make a brilliant profit when the company goes public and manage most of the decisions from here.

Tenev and Bart will own all of Robin Hood’s Class B shares after the offer. According to the prospectus, these shares have 10 times more voting rights than Class A shares, with Tenev controlling 26% of the voting rights and Bart controlling 39%.

They have already cashed tens of millions of dollars worth of stock.

In 2018, they each sold $ 55 million in shares to investment firm DST Global in a secondary transaction, and the following year, the co-founders said they participated in a $ 67.6 million tender offer available to “specific employee shareholders.” Filing said.

Robin Hood is the top five CNBC Disruptor 50 companies on this year’s list.

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Robin Hood’s founder is worth more than $ 5 billion as FinTech IPOs build up

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