Robinhood, a US consumer investing and trading service, announced Tuesday, the acquisition of Say Technologies in a $140 million cash deal.
Say Technologies is a venture-backed startup that makes it easier for investors to exercise their ownership rights. Per Crunchbase data, the company had raised $8 million in 2018. PitchBook data indicates that the company was worth $28 million on a post-money basis following the investment, implying that the company’s backers managed a roughly 5x return on their investment.
“We founded Say to give investors a better way to engage with companies they own, and to give companies tools to better understand and access their investors. As part of the Robinhood family, we’ll be able to further our goal of creating a new ecosystem of ownership and engagement to benefit all investors and companies,” Alex Lebow, cofounder and CEO of Say said.
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Say was backed by Point72 Ventures, among other investors.
Per TechCrunch, the deal is notable because it is Robinhood’s first major purchase since going public in late July, and because it illustrates where Robinhood may look to invest some of its newly liquid equity wealth; when a company goes public, it can more easily purchase other companies thanks to recharged cash balances and a floating stock.
In a blog post, Robinhood wrote that “Say was built on the belief that everyone should have the same access to the financial markets as Wall Street insiders.” It means in practice that Say has built a communications platform that allows even smaller shareholders to pose questions to the companies in which they invest. Sure, some companies are including retail questions in their earnings calls, but what Say has in mind is broader.
“We share a common goal of eliminating the barriers that keep people from participating in our financial system,” the company said.
Say and Robinhood share common goals that will make the acquisition profitable. Per TechCrunch, Robinhood has a huge user pool of retail investors who like to trade and invest. Say has the technology to connect retail investors to the companies that they own. With Robinhood’s database of which retail investor owns what, and Say’s communications tech, the trading platform may be able to offer a better shareholder experience than what rival platforms can offer.
By offering to its user base a service like what Say has built, Robinhood can offer a unique twist on retail investing. This feels somewhat analogous to Spotify spending heavily to procure exclusive rights to certain podcasts; such efforts differentiate Spotify from rivals despite having a commoditized core offering. Trading is now free in many places, so Robinhood layering specialized services on top of its investing service makes good sense, perhaps helping drive user loyalty and net new-user adds.
Shares of Robinhood are off around 1.2% today, despite generally higher markets.
Say said it will keep offering its proxy voting services and Q&A platform to existing customers as part of Robinhood family.
“And together, we’ll find new ways to expand what it means to be an investor through new products and experiences that democratize shareholder access,” the company said.