Ribbit, Robinhood’s key fintech VC firm, steps up at pivotal moment

Meyer “Micky” Malka, founder and managing partner of venture firm Ribbit Capital, once said his firm had a “boring” strategy of driving financial innovation across banking, brokerages and insurance.

But things have gotten decidedly less boring in recent days for Ribbit. 

The Palo Alto-based firm stepped up to lead $3.4 billion in emergency funding for Robinhood to help the online brokerage weather a day-trading frenzy that has upended the financial markets. Ribbit’s sizable and hasty response to the trading crisis is shaping up as a pivotal moment for Malka’s firm, which is younger, smaller and lesser known than some Robinhood backers like Sequoia or Andreessen Horowitz

In addition to the high-stakes drama surrounding Robinhood, which has ambitions of going public in 2021, Ribbit also scored an exit in the $1.2 billion IPO of portfolio company Affirm, an online shopping financing provider. It also is poised for another payday with the expected public market debut of bitcoin-wallet specialist Coinbase, in which Ribbit was an early investor.

Other big firms taking part in Robinhood’s massive fundraising—which comprised a $1 billion round last week and an additional $2.4 billion announced on Monday—included other existing investors such as Iconiq Capital, Index Ventures and NEA

Besides being smaller than those co-investors, Ribbit stands out for being almost exclusively dedicated to startups that are remaking the financial services sector.

Founded in 2012, the firm has emerged as one of the VC industry’s most active fintech specialists, with a portfolio of high-profile names like business credit-card company Brex, robo-adviser Wealthfront and Coinbase, which last week announced plans to go public via a direct listing. 

Ribbit closed its fifth flagship fund in 2018 with $420 million in commitments. At the time of that fund closing, Malka told The Wall Street Journal that Ribbit, with more than $2 billion in assets under management, was sticking with what he called its “boring” strategy dedicated to financial services.

In January 2020, Ribbit embarked on its sixth fund, targeting another $420 million, according to a regulatory filing. 

Ribbit was an investor in several of the largest fintech exits of the recent 12 months. 

These deals included Affirm, which went public last month with a valuation of $12 billion and saw its stock leap nearly 100% on the first day of trading. Among other exits were Root, an auto insurer that completed a $6 billion IPO in November, and Intuit‘s $7.1 billion acquisition of Credit Karma.

Robinhood was, and likely remains, the jewel in Ribbit’s portfolio. The firm first backed the company in its $13 million Series A round in 2014. Under terms of its latest funding, the capital infusion is set to convert to equity at a $30 billion private valuation, or a 30% discount to a public valuation—whichever is lower, Bloomberg reported.

Early investors like Ribbit have a lot riding on Robinhood’s ability to make it through the turmoil of recent days.
 
Another outsized exit could be in the offing for Ribbit, as Robinhood reportedly has been planning for a public market debut this year despite growing scrutiny over the company’s handling of day trading in stocks like GameStop and AMC Theatres. The company, based in Menlo Park, Calif., is considering either an IPO or going public through a reverse merger as it seeks liquidity for its employees and early investors, Bloomberg reported. 

Malka didn’t respond to a request for comment.

In addition to its VC funds, the firm is a sponsor of a special-purpose acquisition company called Ribbit LEAP, which raised $350 million in an IPO last fall. The blank-check company is looking to merge with a financial services company.

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