Social investing platform eToro buys fintech startup Gatsby for $50 million

Multi-asset social investment network and Robinhood rival eToro have signed a definitive agreement to acquire Gatsby — a fintech startup that also aims to go head-to-head with Robinhood — for $50 million in cash and common stock trade.

Israel-based eToro told TechCrunch this week that it had just received FINRA approval, Financial Industry Regulatory Authority to advance the acquisition. The company first filed for regulatory approval in December 2021.

Jeff Myers and Ryan Belanger-Saleh co-founded Gatsby in 2018, a commission-free options and stock trading app for young traders. The pair had previously made a successful exit on the social data room platform Dealtable.com.

TechCrunch reports on the New York-based startup $10M Series A Funding Mid-March 2021. Backers include Techstars Ventures, Beta Bridge Capital, Barclays Bank, SWS Venture Capital, Rosecliff Ventures, a network of “super angels” placed by ClearList and an oversubscribed SeedInvest campaign.

Gatsby, which targets Gen Z and millennials, told me its purpose is to provide people with “a safe, fair trading platform where users don’t have to worry about getting into their heads or being locked out when volatility spikes. outside”. Its app launched on iOS and Android in early 2020.

The company’s entire team of 20 will join eToro.

eToro CEO and co-founder Yoni Assia tells TechCrunch would allow his firm to expand the scope of its U.S. product, which today focuses on stocks and cryptocurrencies.

“The integration of Gatsby will allow us to provide US users with a safe and simple way to trade options and give them more flexibility to use new strategies,” Assia said. “We believe options can provide retail investors with the opportunity to generate returns in today’s more challenging market environment. Expanding our U.S. presence is a key goal and we are excited to partner with the Gatsby team.”

For Gatsby and his investors, the exit was undoubtedly a good outcome.

Gatsby co-founder Jeff Myers told TechCrunch that the startup is not “Plan to end Gatsby’s story. “

“But there’s no denying the product and vision fit between Gatsby and eToro,” he said. “We have always admired Yoni and the team he built and are excited to continue our journey with eToro.”

Gatsby co-CEO Ryan Belanger-Saleh echoed Myers’ sentiment.

“They are truly pioneers of social investing, and we’ve always considered them to be cool brothers and sisters we’d love to live with,” he said in a written statement.

SecondToro has grown rapidly in recent years. The company currently has more than 30 million registered users in more than 100 countries. This is up from 10 million at the end of 2018, 12.3 million at the end of 2019, 17.5 million at the end of 2020 and 26.9 million at the end of 2021. The number of its capital accounts exceeds 2.7 million.

According to Assia, the company generated total commissions of $1.2 billion in 2021, an increase of more than 400% compared to 2019.

For its part, Gatsby said its average monthly options contract volume has grown by about 900% since the start of 2020.

The acquisition marks eToro’s fourth major acquisition since its founding in 2007.it previously acquired the investment tracking app delta; Mark Millions Ltda UK-based e-money company that helped build and launch eToro Moneyits e-money account; and Fillmore, Smart contract/blockchain business, becoming eToro Labs, the internal blockchain innovation and R&D department of fintech.

In March 2021, eToro announced Plan to go public Via merger with SPAC FinTech Acquisition Corp. V in a massive $10.4 billion deal.While the deal was originally slated to close in the third quarter of 2021, eToro announced in July that the agreement had closed in termination.

“We remain private due to current market conditions,” Assia told TechCrunch. “We continue to see becoming a public company as part of eToro’s future and will wait for the right opportunity to take the next step. “

M&A in the fintech world has been going downhill, so the eToro/Gatsby deal is a bright spot in a year full of ups and downs.

Meanwhile, Robinhood’s stock has taken a hit recently, and the company has laid off About 1,000 since the beginning of the year. At press time, the company was trading around $10.90 after hours, well below its 52-week high of $52.06.

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