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There are always startups waiting in the wings to be the next 鈥渋nsert company name here.鈥� In the case of , the stock-trading app valued at $20 billion, there is a growing list of retail-trading competitors who are raising significant venture funding and gaining traction.

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One of them is investment social network, which also offers zero-commission and fractional stock trades via a smartphone app. The company is now valued at $1.2 billion following a $220 million Series D investment announced yesterday. Investors in the deal included existing backers, and, as well as,,,,,, and.

The flurry of news around Robinhood seems to change every day following late January, when the company faced an extraordinarily high volume of trading after individual investors drove up shares of video game retailer , and a handful of other stocks, in a kind of retaliation against hedge funds they claimed were shorting those shares.

It caused such a bruhahaha that a erupted from investors blaming the company for shuttering trades before they were able to get in. In the course of a few days, Robinhood raised $3.4 billion in fresh venture funding to shore up its balance sheet amid heavy trading volume.

Now the U.S. House Financial Services Committee intends to hold a hearing around the GameStop fiasco Feb. 18, Axios reported earlier this week.

How Robinhood works

Robinhood changed online trading when it came onto the scene in 2013, offering free trades and ushering in a new era of retail stock trading by amatuer investors.

To date, the Menlo Park, California-based company has raised in known funding, according to Crunchbase data. This includes , led by , in 2021 alone. Last August, the company was valued at $11.2 billion, and it鈥檚 now valued at almost double that, .

How does Robinhood make money? In five ways, :

• Rebates from market makers and trading venues: When buying or selling through your brokerage account, your orders are sent to market makers for execution. They offer rebates to brokerages.
• Investing tools
• Stock loans
• Income generated from cash: Uninvested cash is put into interest-bearing bank accounts.
• Interchange fees: Interchange fees are earned by most debit and credit card issuers and are meant to cover things like transaction processing and fraud loss.

In order to open a Robinhood account, you have to be 18 years old or older, have a valid Social Security Number, have a legal U.S. residential address within the 50 states or Puerto Rico and be a U.S. citizen, U.S. permanent resident or have a valid U.S. visa.

The company also gathers personal information, including financial and tax identification information, to comply with U.S. government laws and FINRA rules.

Robinhood has more than 5,000 stocks to choose from, and there are that include keeping an account equity of $25,000 or more if you day trade.

Who鈥檚 next?

With Robinhood having a big share of the market, one of the lingering questions was if venture capitalists would be willing to fund competitors. The answer, as we especially learned this week, is 鈥測es.鈥�

Of known investments into 129 companies, investors infused $6.9 billion into companies labeling themselves as a stock exchange and trading platform, according to Crunchbase data. Robinhood is the leader in that group, accounting for $5.5 billion of the total funding raised by such companies. Between 2016 and 2020, 161 investments were made totaling approximately $3 billion.

Public.com鈥檚 recent investment comes two months after the New York-based company raised a $65 million Series C. It has now raised a total of $310 million.

Public also said Wednesday that it has amassed 1 million members just 18 months after launching. Though the company didn鈥檛 say how much of that was in the past few months, there is no doubt what happened in the market a few weeks ago probably boosted Public鈥檚 appeal and most likely propelled it to be Robinhood鈥檚 chief rival.

Further separating it from Robinhood, Public announced its decision on Feb. 1 to from its business model. Brokerages engaged in PFOF receive rebates on trades routed through its clearing firm (See No. 1 on the above list of how Robinhood makes money).

The main criticism of PFOF, according to Public, is that it 鈥渃reates misalignment between the financial aims of the brokerage and the interests of its clients.鈥� Public is now collecting optional tips from users in exchange for executing their orders.

Tipping is not the only for Public. Similar to Robinhood, it makes interest off of聽 uninvested cash balances. One difference between it and Robinhood is that the Public鈥檚 clearing firm, Apex, lends shares to investors and institutions that need or want to borrow them. There is also a future option for Public to charge a subscription fee for paid-for premium features.

鈥淲e believe optional tipping is one of the most empowering, transparent ways for us to monetize 鈥� the decision is now in our members鈥� hands 鈥� and will bring us one step closer to our mission to open the stock market to everyone,鈥� the company said in its .

In addition to Public, well-funded companies hot on Robinhood鈥檚 heels include:

• , a crypto trading competitor that has in known capital to date from investors like, and, and
• , an Israel-based social trading and investment marketplace, which raised in known capital to date from backers like and

There are also some up-and-coming companies that raised within the past six months, such as social investment platform , which raised $9.7 million last fall. , which is developing an avenue for Indian investors to invest in the U.S. stock market, has also raised $3.6 million in seed funding.

Some are also overseas: , based in Mexico City, raised $12 million in a Series A round earlier this month. And 鈥檚 and are backing , an open investing ecosystem in Dubai.

鈥淐ommunity and cultural context is key to succeeding in international markets,鈥� Taub said via email. 鈥淏araka knows this and has set out to empower young investors in the Middle East by giving them the tools to take control of their investments. Keep an eye on them. They are the retail investor platform the region’s been waiting for 鈥� the Robinhood in the Middle East.鈥�

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