(Reuters) - Online brokerage Public.com, which competes with Robinhood, said on Wednesday it had raised $220 million in fresh funds from new and existing investors, lifting its valuation to $1.2 billion.
Investors have doubled down on online brokerages that were at the center of a social media-driven trading frenzy on Wall Street in heavily shorted shares of companies such as GameStop Corp (NYSE:GME).
Robinhood closed a mammoth $3.4 billion fundraise earlier this year to shore up its finances as clearinghouses asked for more collateral due to heightened volatility.
New York-based Public.com operates a zero-fee trading app that also doubles up as a social media investment community, where its members can own fractional shares of stocks and exchange-traded funds (ETFs), according to its website.
Members can follow popular creators and share their own investing-related ideas like any other social media platform.
Earlier this month, Public.com decided to abandon the controversial payment for order flow practice, which refers to the process where brokerages route orders to market makers to execute trades instead of sending them directly to exchanges.
The practice has drawn scrutiny from regulators globally as it creates an incentive for brokers to send orders to whoever pays the most, rather than the place that might get the best outcome for customers.
Including the latest round, Public.com has so far raised about $310 million. The startup currently has one million members on its platform.
Investors including Tiger Global Management, Accel Partners and Will Smith's Dreamers VC participated in the latest round.
The company plans to use the funds to add features such as crypto trading, pre- and post-market trading, while also setting up recurring investments for members.