Richard Branson takes stake in Lightyear, Europe’s answer to Robinhood

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The Lightyear app.

Lightyear

Lightyear, a European challenger to trading platform Robinhood, has raised $25 million of funding in an investment round backed by British billionaire Richard Branson.

Silicon Valley’s Lightspeed Venture Partners led the deal, the company told CNBC exclusively — a rare vote of confidence for an upstart brokerage at a time when global stock markets are deep in the red.

Founded in London last year by Estonian entrepreneurs Martin Sokk and Mikhel Aamer, Lightyear offers commission-free trading in over 3,000 global stocks and multi-currency accounts. Sokk and Aamer previously worked at Wise, the U.K.-listed money transfer firm.

“For too long, financial markets have been overly complex with high barriers to entry and confusing jargon,” Branson said in a statement shared with CNBC.

“Martin, Mihkel and the Lightyear team are lifting the lid on the world of investing – making it more transparent whilst empowering people through education – to choose the products which are right for them.”

The air and space travel tycoon took an undisclosed stake in Lightyear through his conglomerate Virgin Group.

European expansion

It’s still a young start-up, having only launched in the U.K. in September. But Lightyear has ambitious expansion plans.

Fierce competition

Though Europe may be behind the U.S. when it comes to the prevalence of retail trading, the region has become increasingly crowded with various online trading apps on the hunt for clients.

Lightyear faces competition from both established brokers like Hargreaves Lansdown and AJ Bell and fintechs such as Revolut, Freetrade and eToro. Meanwhile, Robinhood has also signaled its intention to enter the European market, although with a focus on crypto rather than shares.

The company previously tried to launch in the region some years ago, but scrapped the plans to focus on its home market instead. It has since agreed to acquire U.K.-based crypto exchange Ziglu.

In May, Lightyear tapped Wander Rutgers, who previously led Robinhood’s U.K. expansion efforts, as its chief operating officer.

Investors have soured on high-growth tech companies like Robinhood lately over concern that their loss-making business models may not endure a deteriorating economic climate marked by rising inflation and tighter monetary policy.

Lightyear isn’t yet profitable. Right now, its main source of income is a flat 0.35% on currency conversions for trading in foreign shares.

Sokk says the firm plans to eventually diversify its revenue stream with additional features, including a paid subscription service that’s set to launch later this year.

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