Robinhood Venture Backer NEA Reaps More Than $3 Billion Post-IPO

On Aug 30, 2021

(Bloomberg) — New Enterprise Associates reaped a 15-fold gain on its investment in Robinhood Markets Inc. — a return that would have been even higher if not for an emergency funding round earlier this year.

The venture capital firm paid $231 million for its 10.3% stake in Robinhood, according to a regulatory filing. That same stake, amounting to 74.8 million shares, was worth about $3.5 billion as of the close of trading on Friday.Robinhood has been at the center of the meme-stock frenzy that’s captivated Wall Street this year. But after wild trading sent its collateral requirements soaring, the company was forced in January to draw down its credit lines and raise $3.4 billion from backers — including NEA — to post more collateral with the industry’s clearinghouse.

NEA pitched in about $75 million that later converted into Robinhood common stock at $26.60 a share, a separate regulatory filing showed. That was far more than the venture firm, which began investing in Robinhood in 2015, had paid in earlier funding rounds. Absent the last-minute financing, NEA would have enjoyed a multiple of almost 22 times its investment.

NEA, with offices in Menlo Park, California, and Chevy Chase, Maryland, has invested $23 billion in more than 500 companies and participated in 230 initial public offerings, according to its website.

Spokespeople for Robinhood and NEA declined to comment. Other major shareholders of Robinhood include DST Global, Index Ventures and Ribbit Capital.

Shares of Robinhood have whipsawed since the company went public last month, surging as high as $85. The stock fell 3.1% to $45.40 at 9:37 a.m. in New York after Robinhood said underwriters partially exercised their over-allotment option and will buy about 4.35 million shares at the IPO price of $38.

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