5
Trade Republic
| Power Score: 41.37 | Momentum Score: 78.82 (1) | HQ: Berlin, Germany | CEO: Christian Hecker |
Economics
Valuation: $5.3 billion (+2,127% vs. last round, 2020)
Amt. Raised: $991.7 million
Politics
Lobbying Spend: No
Industry Orgs: No
People
Headcount: 466 (+134% YoY)
Engineering Headcount: 77 (+142% YoY)
Big Tech Experience: 4.1%
Open Roles: 136
Innovation
R&D Spending: n/a
Patents Applied For: 0
Patents Owned: 0
Acquisitions: No
On Power
Fresh off a
$900 million funding round in May 2021, Trade Republic — which operates in Germany, Austria and France — has grown into one of Germany's most valuable tech companies, with a valuation of $5.3 billion. It offers commission-free trading for most assets thanks to its use of payment for order flow, though each trade costs €1 to execute for what the company says are third-party costs. After its May funding round, Trade Republic disclosed that it had €6 billion under management stored across 1 million customer accounts.
On Disruption
Trade Republic is growing at an astounding rate which is in part due to its ability to bring what Robinhood is doing in the U.S. to the European market. That pattern played out again in April 2021, when Trade Republic
announced its expansion into commission-free crypto trading (if you don't count the €1 flat fee it charges). One of the big questions for Trade Republic is whether it can emulate Robinhood's financial success in a more constrained regulatory environment. Robinhood has had tremendous success generating revenue from the crypto trading boom, but that's happened through an extension of the payment for order flow model that exists in largely uncharted regulatory territory — and the European Union tends to be more aggressive in regulating tech than the U.S.
Tea Leaves
The EU's tough approach to financial regulation could be coming for payment for order flow. The European Securities and Markets Authority told the Financial Times in February 2021: "The payment for order flow model is certainly present in the EU but at this stage we don't have evidence concerning its use by specific entities or type of entities." Then in July 2021, ESMA said "PFOF raises serious investor protection concerns." ESMA advised member states to make sure companies in their territory are complying with EU rules. The regulatory push is an ominous sign for the Trade Republic, particularly since it set a goal of expanding across all eurozone countries by mid-2022.
They Said It
"We have negative interest rates, and we have inflation, and we have a huge pension gap. All three factors demand that you need to do something for yourself." — CEO Christian Hecker in a May 2021 interview
Return to the Consumer Trading Platforms Power Index here.