Robinhood said it expects the deal to close in the third quarter of this year. X1 co-founders Deepak Rao and Siddharth Batra will oversee the new business for Robinhood, and Rao will serve as general manager of credit cards.
CAPITAL ONE VENTURE REWARDS CREDIT CARD SOFTWARE
X1 doesn’t charge an annual fee for its stainless steel Visa card, has no late or foreign transaction fees and rewards users with “points.” The company also claims that its card is “smart” in that it has built software features that work with the credit card. The startup first made headlines for its unique model, which allows it to underwrite customers based on their income rather than their credit scores. (Since then, other players have emerged with similar models - such as Tomo Credit, which offers credit based on cash flow rather than credit). Capital One Venture offers 75,000 miles for spending 4,000 in the first 3 months. The Capital One Venture Rewards Credit Card offers new members a one-time early spend bonus of 75,000 miles after spending 4,000 in their first 3 months. The card’s travel-related rewards are very generous, especially considering how flexible the redemption process is. Robinhood currently earns interchange fees from its debit card. Yes, Capital One Venture is an excellent credit card provided you’re someone who likes to travel. Indeed, the acquisition of X1 gets Robinhood into the credit card business with the interchange fee revenue that comes with it. On the other hand, Robinhood noted in its announcement that this move is “an important step in our journey toward broadening our product offerings and deepening our relationship with existing customers.” Not only has crypto trading slowed down, but its core trading business overall saw declines in May, most likely prompting that desire to diversify its business. A better example might be Yonder, a U.K.-based credit card startup that raised $15.4 million in April at an $89 million post-money valuation, converted in today’s U.S. Granted, Petal has been around longer and raised more. So, the purchase price may reflect the dip in fintech valuations we’ve seen in the past six months.įor example, Petal raised $140 million in 2022 at an $800 million valuation. If you take a look at recent raises by other credit card companies, you might say that X1 raising $62 million should yield a high valuation in the hundreds of millions.
On the one hand, while X1’s valuation is not known, it looks like Robinhood is getting a good deal with $95 million. If you are a member or customer of one of the following organizations, you may qualify to have some or the entire TSA PreCheck application fee covered.
The company announced its most recent raise of $15 million in December, when it also touted a 50% boost in its valuation. X1, which offers an income-based credit card with rewards, raised a total of $62 million in venture-backed funding from investors like Soma Capital, FPV, Craft Ventures and Spark Capital since its 2020 inception.
Robinhood announced on Thursday that it was acquiring X1, a no-fee credit card startup, for $95 million in cash.
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