Multi-asset social investment network and Robinhood competitor eToro have signed a definitive agreement to acquire Gatsby — a fintech startup that also wanted to compete against Robinhood — for $50 million in cash and common stock agreement.
Israel-based eToro told businesskinda.com this week that it has just received approval from FINRA, the Financial Industry Regulatory Authority, to proceed with the acquisition. The company first applied 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 aimed at younger traders. The pair had a previous successful exit in Dealtable.com, a social data room platform.
businesskinda.com reported on the New York-based startups $10 Million Series A Raise Mid-March 2021. Backers include Techstars Ventures, Beta Bridge Capital, Barclays Bank, SWS Venture Capital, Rosecliff Ventures, a network of “super angels” posted by ClearList and an oversubscribed SeedInvest campaign.
Gatsby’s target customers are Gen Zers and Millennials, and it told me it was intended to provide people with “a safe and fair platform to trade on without users having to worry about getting over their heads or being locked out of names when volatility peaks.” The app was launched in early 2020 for iOS and Android.
The company’s entire 20-person team will join eToro.
Yoni Assia, CEO and co-founder of eToro, told businesskinda.com that the purchase would allow his company to expand the range of its US product, which today focuses on stocks and cryptocurrencies.
“The integration of Gatsby allows us to provide US users with a safe and easy way to trade options, and give them more flexibility to adopt new strategies,” Assia said. “We believe that options can provide retail investors with opportunities to generate returns in today’s more challenging market environment. Scaling our US operations is a key goal and we are excited to partner with the Gatsby team.”
The exit certainly appears to be a good outcome for Gatsby and its investors.
Gatsby co-founder Jeff Myers told businesskinda.com that the startup isn’t “planning to end the Gatsby story altogether.”
“But the product and the vision between Gatsby and eToro was unmistakable,” he said. “We have long admired Yoni and the team he has built and are very excited to continue our journey with eToro.”
Ryan Belanger-Saleh, Co-CEO of Gatsby, echoed Myers’ sentiments.
“They really have been the pioneers of social investing and we’ve always seen them as the cool older sibling we’d love to hang out with,” he said in a written statement.
EToro has grown impressively in recent years. The company currently has more than 30 million registered users in more than 100 countries. That’s an increase 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 accounts funded exceeds 2.7 million.
The company generated a total of $1.2 billion in commissions in 2021, a growth of more than 400% compared to 2019, according to Assia.
For its part, Gatsby says it has grown about 900% in its average month-over-month contract volumes for options since early 2020.
The acquisition marks eToro’s fourth major acquisition since its inception in 2007. It previously acquired the investment tracking app Delta; Marq Millions Ltd.a UK-based e-money company that it helped build and launch eToro Money, his e-money account; and company, a smart contracts/blockchain company that became eToro Labs, the in-house blockchain innovation and R&D unit of the fintech.
In March 2021, eToro announced: planning to go to the stock market through a merger with SPAC FinTech Acquisition Corp. V in a huge $10.4 billion transaction. While the transaction was set to close in Q3 2021, eToro announced in July that the deal had been closed ended.
“Due to the current market conditions, we remain private,” Assia told businesskinda.com. “We continue to view a publicly traded company as part of eToro’s future and will wait for the right opportunity to take this next step.”
M&As in the fintech world are declining, so the eToro/Gatsby deal is a bright spot in a year full of ups and downs.
Meanwhile, Robinhood’s stock has taken a beating lately and the company has laid off about 1,000 people since the beginning of the year. At the time of publication, the company was trading around $10.90 after hours, significantly below its 52-week high of $52.06.
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