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AutorenbildJuan Diego Parra Castillo
26. Mai 202113 Min. Lesezeit

Bonus Episode: Trade Republic becomes Germany’s most valuable Startup with 5.3 bn US$ valuation

This story was migrated from our old blog, originally published on May 27th, 2021.


New Blog


This blog post first appeared first on old medium publication (https://medium.com/startuprad-io), and was moved to this blog with the relaunch of our website in summer 2024.


Introduction


“It’s our ambition to be present across the entire Eurozone in the next four months,” Christian Hecker according to TechCrunch


Welcome to This Month in German Startups — A bonus episode since we have a new king in town. Trade Republic just became Germany’s most valuable startup with a 900 mn USD funding round backed by investors like Sequoia. Chris joins Joe for this episode.


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Start in 2015 — at comdirect Startup Garage

The story of Trade Republic starts with the comdirect startup garage. comdirect is Commerzbank’s online broker, founded during the late 1990s. Commerzbank again is Germany’s 2nd largest listed bank.

So, the founding team Christian Hecker, Thomas Pischke, and Marco Cancellieri started out with the idea of a German RobinHood Trading app (What is today called a neobroker). The Garage helped at the start in 2015 but did back out at funding the startup. The team did not receive funding from comdirect Garage, because one million Euros was too much to invest in a company at a seed stage


Early Years and Sino AG


This led to the entrance of Sino AG from Düsseldorf, an important investor in the German startup scene. They helped Trade Republic with the initial funding, even owned 2/3rds of the company at one stage. They kept investing, in total 3 m Euros, according to a podcast interview of their CEO (Ingo Hillen). Sino AG cashed in 150 m Euros at Series C funding, by selling some of their stakes. With an investment of 3 million euros their total cash and remaining stake are valued at 250 mn Euros, according to Sino.

Today’s Trade Republic Bank was legally incorporated in Munich in August 2017, but they swiftly relocated to Berlin in May 2018.


Series A and Series B


The VC Creadum invested in Summer 2019 in their Series A. The company went on to raise their Series B funding of 62 mn € in April 2020, led by Accel and Founders Fund putting their total fundraising at 80 mn €. So one can see that there is a giant leap from 80 mn € in total funding, to approx. 750 mn Euros in a Series C.


Also caught up in GameStop

Their clients also got in trouble with a trading stop during the GameStop frenzy.


We wrote about this in our blog here:


The Economic Background to the Monster Funding


Germany has never had a large share of stock market investors. Germany is currently estimated to have a population of 84 mn people, with an estimated 2.7 mn people active in stock markets.

According to their press release, the company could increase their total customer base to 1 mn in Germany, France, and Austria. The neobroker states that half of their new customers have never invested in capital markets before. It is not known how many of their clients are using the app weekly or monthly. But according to their press release, their client assets are at 6 bn Euros (7.32 bn US$). Their market share in Germany is at approx. 10% of all shareholders in Germany, according to one of their investors in the Finanz-Szene podcast.

The background to the funding is of course the current circumstances with the (still in parts) enacted partial lockdown in Germany and France. This led people to spend more time at home and some discovered trading as a favorite pastime.


The Funding


Trade Republic raised 750 mn Euros (900 mn USD) at a valuation of 4,3 bn Euros (5.3 bn USD). The new investment also led to new investors: Sequoia — the legendary US based VC — took the lead and the new backers are TCV and Thrive Capital. Existing investors like Accel, Founders Fund, Creandum and Project A, also invested. The investment catapults the Berlin-based fintech into being one of the biggest privately-held fintech businesses in Europe, outpacing N26 (~ 3.5 bn USD https://www.bloomberg.com/news/articles/2020-10-12/n26-said-to-weigh-2021-fundraising-above-3-5-billion-value#:~:text=N26%20Weighs%202021%20Fundraising%20Above%20%243.5%20Billion%20Value&text=N26%20GmbH%20is%20considering%20a,a%20valuation%20above%20%243.5%20billion)


Outlook and Competitors


The funding will be used to expand into more european countries. Spain and Italy are the largest economies in Europe TR has not yet entered. TechCrunch also speculates about Benelux, Ireland and Finland.

Trade Republic can be sure to encounter a lot of opposition on their way to become the No1 broker in Europe. We just have some examples here:

Germany:

We will keep you updated.


The Video Interview is set to go live on Thursday, 27th of May 2021


Further Readings / Sources


Feedback


Reach out to us, here is our audience survey, to give us feedback, suggest topics, interview partners or just to say “Hallo!” https://forms.gle/mLV6mVKwGwKuut8BA


The Interviewer


This interview was conducted by Jörn “Joe” Menninger, startup scout, founder, and host of Startuprad.io. Reach out to him:LinkedInTwitterEmail


Transcript


[0:00] Music.


[0:19] Hello and welcome everybody this is Joe from startupradio you are listening to bonus episode of this month in German startups usually I do this together with Christianin a transatlantic music recording but this time Christian he were here in Germany how you doing man.Germany for first-time the pandemic and I’m in.What is exactly why it looks like it’s a basement in the trait altre town of Bremen yeah I’m good.Interesting times to be traveling again yeah I’ll audience who’s listening to us on a regular basis already knows that you’ve been already completely vaccinated so traveling for you is just a breeze right.Totally I mean you still have to like wave the little white American card every now and then but I’m yeah.


[1:13] It’s really really nice do that and that’s the idea that he fully vaccinated the white Cartier referring to right okay.I’m we are talking today in this bonus episode 7 straight Republic becomes Germany most valuable start up with 5.3 billion US dollar.U.s. dollars they just closed a funding round.With 900 million USD led by legendary investor Sequoia.


[1:45] Christian what do we know about the past of trade Republic.Well so first of all trade Republic is a new broker so it’s a platform where you can buy and sell.Stocks you can buy and sell ETFs their cryptocurrency as of recently and it’s a company that started in 2015 at thecome direct startup come — so um copyright is contestants online broker so from a German bankingchain banking giant you could even say and the comdirect was founded in the late 1990scombat bug is Germans he’s the second-largest listed bank so the founding teamof trade Republic kristyn Decker Thomas Pisgah and Marco country Larry started out with the idea of a German Robin Hood trading app so Robin Hoodnow GameStop same I guess.


[2:45] And Jim look like of that so yeah what is now called new broker some contacts other brush helpedstartup in 2015 but then they’d backout of that funding the startup the team did not receive funding from the garage because 1 million euros was too much to invest in a company at a seed stage for them and in theearly years they got a different kind of partner the quantities you know I’ll get from Dusseldorf.I’m Reno hockey is important invest in a German startups in they helped trade Republic with the initial funding Round And even owned two-thirds of the company at one stagekept investing and told it was three million euros according to a podcast interview of their seal.Ingo Helen and sonjia then Ashton a hundred and fifty million euros a disease series C funding there’s a Sonysee no of course back selling some of their steak with an investment of 3 million euros their total cash and remaining stake now aren’t valued at 250 million euros according to the self so to Zeno today’s trade Republic Bank was largely Incorporatedlegally Incorporated in Munich in August 2017 but they relocated to Berlinin May 2008 teen with the actually actual series funding history started that you may be no more.


[4:13] Yes and we may add that these new Brokers are usually funding thereoperations not with charging you a fee for the trade for example trade Republic they charge you just a lump sum of 1 euro per trade.To cover external costs and basically what they are doing they receiving what is called Kickback meaning Brokers and dealers give themback some money for executing fees plus they can do a lot with all the cash that is on the balance on the account of their clients admittedly this is currently not.I do believe a great source of income but that’s basically the idea how.


[4:57] Two of the possible sources how new Brokers Fab their zero.Commission trading as I said they chart when you’re per transaction but they don’t charge commission for.The worktrade Republic is doing itself let’s talk a little about series A and B the VC Cree Adam invested in summer 2019in this series a the company went to raise the csb funding of 62 million in April 2020 led by Excel and Founders fund andthis time putting in total funding at somewhere around 80 million Euros so one can see that there is a giant leap from 18 million total funding.Always talking about yours to 750million euros in funding keep in mind we jumping here between 750 and 900 that’s just for the simple reason that 750 millions or 950.750 million euros on 900 million u.s. dollars and the valuation.


[6:04] This also 4.3 billion euros or 5.3building you asked a lot sorry about that don’t get confused it caught me at one point that’s why I’m making it clear and of course they also got caught up in GameStop @ Chris already referred to we’ve been talking.About thisin our blog post but admitted we reach out to try to public that’s what we got the press release at the same time as all the other blocks but admittedly they didn’t reply to our questions there that was a little bit more technical.


[6:38] Let me get a little bit into details basically the trading platforms the trading venues they charge.The executing parties that the parties that are members theresecurity collateral so in case one party default it doesn’t take down the market they just cash in the collateral and the business keeps going and the Robin Hood Co said at one point that they had to stopum offer training in GameStop because due to the volatility the DPC see there isthis is like a Central Station in the US for traits they want to charge them ridiculous amount of security collateral so I wrote them an email hey guys.


[7:24] What’s this the same for you for trade Republic that actually never replied they had a very very nice statement which actually surprised me because it was almost one page without saying anythingbut very wisely very nicely worded admittedly they’ve been nice to feel but I didn’t want to tell me anything I’m the let’s go little bit to the economic background of the monster funding Germany has never had a large sharein stock market investors Germany is currently estimated to have a population around 84 millionpeople when the estimated 2.7 million people active in the stock market meaning buying sellingowning shares directly according to the press release the company could increase their total customer base to 1 million but they are not only active in Germany but they’re active in Germany France.And Austria.


[8:19] The new prokhor states that half of the new customers have never invested in capital markets before so they draw drew in like 500,000.Newbie investors and it’s not known how many of the clients are using the app.On a weekly or monthly base but according to the press release their client assets are now somewhere aroundeight building yours again this is 7.32 billion US Dollars the the CEO of.Zeno ArgyIngo Helen said in a podcast interview with Finance Cena that their market share in Germany is somewhere approximately 10% of all.Shareholders in Germany so we could guess them between 200 and 300 thousand the 2.7 billion numbers actually dating to 2020 and the.Stock.Ownership has increased since significantly also Q2 coverage of GameStop across the normal media in Germany.


[9:26] The background to the funding of course are the current circumstances with the still in part in actualinactive partial lockdown in Germany in France and this led people to spend more time at home and some discovered trading as a favoritePastime question you know a little bit more about yeah sure I mean yeah the funding and probably the questions behindI mean I find the stem percent number just very impressive.I also doubt it a little bit I can’t really imagine that like one intend German shareholders would actually tradetheir stuff just on this one website but yeah but also since you said the denominator the overall group is just not that big a dummy so especially.


[10:17] Plus you you remember the news when we talked about and 26 and somewhat are only 29 percent of the people who opened in a campus like a small number I’m not sure about the 20% but somewhere in this area.Actively used to end 26 account at the other ones just opened up and tried it out a little bitmaybe that’s the case we don’t have any numbers on that yeah so as you said looking at the fundingtrade Republic raise 750 million euros in their series see which put them at a valuation of 4.3 billion euros of 5.3billion US Dollars this new investment round also led to new investors Sequoia legendary US based Venture capitalists took the lead and new backers are tcv and drive capital.Existing investors were part of it like Excel Founders fund Korean demand project a and the investment catapults the britain-based fintech.Pin-to-pin one of the biggest privately held fintech businesses in Europe orreason for this podcast episode Germany’s most valuable started exactly they actually outpaced 1026 rate.


[11:33] My favorite and 26 with it now.


[11:39] I think necessitates a closer look at what the company actually does and in which field in which industry and.


[11:48] What their plans are so probably before we go into some of theproblems within the specific industry they are operating in just one closer look at what they’re going to use the money for from the series seeit will be used to expand into more European countries so Spain and Italy are largest economies in Europethat trade Republic has not yet entered TechCrunchalso speculates about the Benelux countries Ireland and Finland and according to TechCrunch Christian hecka so one of the founders said is I wouldn’t be ashamed to be present across the entire Eurozone in the next four months so we are looking atthe end of summer here.So what I actually would just like to add is a we may add because a lot of people are listening or watching us from outside of Europe and looks means a group of three smaller countriesBelgium Netherlands and Luxembourg just to make it clear in it looks bigger.Yeah but one thing probably like the biggest asterisk here or like the biggest question mark is that trade Republic does not operatein a field that is not competitive they and they can be sure to encounter a lot of opposition on the way to become the number one broker in Europe.


[13:17] We have a couple of examples here and I don’t want to steal too much of looking at the other points of critique we have established players like in divawhich in 2019 was hailed as Germany’s most successful Bank we have concerts from BNP Paribas we have comdirect which we talked about above still existing from coma that we had we have the S broker which is the online broker system of the German troops organizations Rock hasn’t stilllike one of the most visible and successful German banking structures in Germany we have D copywhich is more operating on also like a low cost to the customer side of things from by another beer so it’s definitely not an area where trade Republic is the sole Monopoly always deed is the only one operating and meaning being a monopolistbut we also have startups yes and again I would like to add a when you talked aboutback custom Jim Thrift organization so basically when you go into small City usually the big players are notthey’re located anymore not talking about like Berlin Frankfurt Munich Hamburg cologne and other big cities but talking about like the the small towns population fifty thousand a hundred thousand.


[14:34] Maybe 200,000 what if you go there you have a Co-operative Bank usually they’re advised norfolk’s Punk plus the red sfrom this back has an organization so it’s one that is very Broad and they still are a group of I do believe someone in the area of 400 to 600 a single institutionsworking together there so there’s a lot of power behind it.


[15:00] Yeah so trade Republic making trade Republic definitely around the people has to learn and it cannot depend on a Brand’s reputation like spark acid for example.Exactly what which get going to be honest they also have some time yeah they also sometimes have an image of being a bit more on the conservative side.And so probably if you’re an online broker you wouldn’t necessarily think well do I want to buy my cryptocurrency with the spa cousin.


[15:30] Totally we just talked about the crowded field of competitors startups and recent entries scalable Capital based in Munich started out withwith an investment theme so they basically helped as.You would call online wealth manager online robot visor area.But they are also now going a little bit too boards more Equity more direct investmentand what we have here listed in Frankfort is flat text that may be one of the biggest competitors we referring above to the interview with Finance scene at the podcast and actually what the CEO is talking aboutthe CEO of see no argued that biggest investors always talk about is flat tax so he definitely sees themas number one competitor and they currently valid only at approximately 3 billion euros meaning 3.6 billion US dollarbut they are targeting a more professional investor audience and charge a small fee per trade.


[16:39] Other noteworthy new broker competitors including for example bid Wala reprinted to Newry they are the only one dealing incryptocurrencies exclusively you can learn more down here in the interview with the CEO and founder.Books of backs from the Netherlands which is already present in Germany big Panda from Austria which has talked about them they became Australia’s first unicorn with the race 170 million u.s. dollars at a 1pointtwo billion US dollar evaluation you remember Chris like a few weeks ago and nobody’s really sure about a market entry of the originalRobin Hood in Germany so this looks very competitive and of course we will you guyswe keep you guys updated in our regular this month in German startups I do believe we will have some more newsnot maybe in June in our Juniors wrap up but as you guys know we taking August and July off at least for the startupnews.And then when you when we’re back in September do belief will have some news about trade Republic again Chris what do you think.I think of course we are happy to have a company.Can this much recognition but I think also yeah as we said there are a lot of.


[18:06] Question marks are a lot of interesting challenges to be solved by trade Republic yes.


[18:17] That’s why it is called in Germany not Venture Capital but risk Capital yes good Chris.With it always a pleasure talking to you let’s get soon to this month in German startups let’s do it bye good bye bye.


[18:34] If you are a professional looking at the European startup scene Germany is a place you cannot miss.


[18:42] Music.


[18:51] Reviews each week most likely you have never heard or read anything only startups before in English but you will in the future be ahead of the curve And subscribe to stay.


[19:02] Music.


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