Richard Branson takes a stake in Lightyear, Europe’s answer to Robinhood
The Lightyear app.
Lightyear, a European challenger to trading platform Robinhood, has raised $25 million in an investment round backed by British billionaire Richard Branson.
Silicon Valley-based Lightspeed Venture Partners led the deal, the company told CNBC exclusively — a rare vote of confidence for a brokerage that came at a time when global stock markets are deep in the red.
Founded in London last year by Estonian entrepreneurs Martin Sokk and Mihkel Aamer, Lightyear offers commission-free trading in more than 3,000 global stocks and multi-currency accounts. Sokk and Aamer previously worked at Wise, the UK-listed money transfer company.
“For too long, financial markets have been too complex with high barriers to entry and confusing jargon,” Branson said in a statement shared with CNBC.
“Martin, Mihkel and the team at Lightyear are lifting the veil on the world of investing – making it more transparent while empowering people through education – to choose the products that are right for them.”
The aviation and space transportation mogul has taken an undisclosed stake in Lightyear through his conglomerate Virgin Group.
It’s still a young start-up, which only launched in the UK in September. But Lightyear has ambitious expansion plans.
The company will launch its app in 19 other European countries, including Germany and France, on Thursday, expanding its footprint to the euro zone. It aims to then launch in non-eurozone countries such as Sweden and Norway.
The deal shows just how much investor appetite there is still for a Europe-focused investment app, even as Robinhood faces a lull in US trading volumes, according to Nicole Quinn, General Partner at Lightspeed.
“Retail investments last year more than doubled in the United States. Up to one-fifth of all trades are retail investors in the United States,” she told CNBC. “We think Europe is heading in that direction.”
Still, the cash injection comes at a difficult time for stock markets, which have fallen in response to fears of a looming recession – Robinhood is down about 78% from its IPO price.
Martin Sokk, CEO of Lightyear, said he was not worried about falling public markets.
“Rising, falling or drifting in the markets doesn’t impact us too much because we’re building something that takes an awful lot of time,” he said in an interview.
Although Europe may be behind the United States in retail prevalence, the region is increasingly crowded with various online trading apps seeking customers.
Lightyear faces competition from established brokers like Hargreaves Lansdown and AJ Bell and fintechs like Revolut, Freetrade and eToro. Meanwhile, Robinhood has also signaled its intention to enter the European market, albeit with a focus on crypto rather than stocks.
The company had already tried to enter the region a few years ago, but had abandoned the plan to focus on its domestic market. It has since agreed to acquire UK-based crypto exchange Ziglu.
In May, Lightyear brought on Wander Rutgers, who previously led Robinhood’s UK expansion efforts, as chief operating officer.
Investors have recently taken pain in high-growth tech companies like Robinhood, fearing that their loss-making business models could not withstand a deteriorating economic climate marked by rising inflation and tighter monetary policy.
Lightyear is not yet profitable. Currently, its main source of income is a fixed rate of 0.35% on currency conversions for trading foreign equities.
Sokk says the company plans to eventually diversify its revenue streams with additional features, including a paid subscription service slated to launch later this year.