Investment Platform Public Announces $220 Million Round, Major Changes to App
In recent weeks, retail investors have been a big topic of discussion. With traders gathering on forums such as Reddit to discuss investments, the power that FinTech brokerage apps can give these customers was seen in a newsworthy short squeeze earlier this month. Now the app Public, which aims to make the stock market social, is shaking this up by not only revealing a new round of funding but also adjusting its monetization model.
Today, Public formally announced that it had raised $220 million. The Series D includes participation from returning investors Accel, Greycroft, and Lakestar, joined by Intuition Capital, Tiger Global, Mantis VC, Dreamers VC, Inspired Capital, Vine Capital, Aglaé Ventures, and YouTuber Philip DeFranco. According to TechCrunch, the round valued the company at $1.2 billion, solidifying the startup’s unicorn status. Meanwhile, the FinTech also announced that it had reached a major milestone as it now has more than one million members — achieving that figure just 18 months after officially launching.
While the funding round and member milestone were certainly big news, they weren’t the only headlines Public has drawn this week. Yesterday, the platform announced that it no longer utilizes payment for order flow (PFOF). This practice saw the app passing off customer trades to other firms to earn a commission. Now, Public trades will be routed directly to the New York Stock Exchange and NASDAQ with the assistance of the platforms clearinghouse, Apex. Acknowledging the fact that discontinuing PFOF will deal a monetary blow to the start-up, the announcement was accompanied by the debut of a new in-app tipping feature. At this time, the maximum tip that the platform will allow is 5% of the order amount and tipping is completely voluntary for users.
These developments with Public come as one of their main rivals, Robinhood, faces intense controversy and scrutiny. As stocks such as GameStop, AMC, and others experienced volatility as part of a short squeeze, Robinhood made the decision to limit trades on these tickers, only allowing users to sell and not to buy. Notably, on the same day that Robinhood made this move, Public also halted trades for GameStop and others — although they alerted users that this was a demand from Apex and was a decision they disagreed with. These restrictions were lifted later that day. Soon after this episode, Public announced its intentions to move away from the PFOF model, citing conflicts of interest that may arise when FinTech brokerages rely on these commissions.
As for what’s ahead for Public, the company says it has many new features in the works. These include the ability to trade cryptocurrencies, engage in pre- and post-market trading, and set up recurring investments. Of course, while the app may be having a great week, it does still face competition from well-funded FinTechs such as Robinhood as well as other discount brokerages that have dropped their commission fees in recent years. Still, with their PR-savvy response to recent events and now millions of extra funds in their coffers, it seems that Public is ready to make a splash as the brokerage wars ramp up.