According to X1, there were 500,000 persons on their waiting list for a credit card in 2022. The startup has raised $62 million from venture capital firms over the last two years.
The well-known cryptocurrency and stock trading software Robinhood is growing its clientele by acquiring credit card startup X1 in a $95 million deal. Along with free trial and single-use credit cards, X1 also provides income-based credit cards with benefits.
According to a statement released by Robinhood on June 22, the agreement will be completed by the end of September. The company sees the acquisition as a crucial step in strengthening its ties to its current clientele.
With the acquisition, Robinhood adds a fresh source of income to go along with its current debit card services. In a press statement dated July 2022, X1 stated that its monthly volume was $50 million and that by the end of the year, it would have reached $1 billion in yearly spend.
The monthly active user base for Robinhood decreased from 16 million in Q1 2022 to just under 12 million in the same time this year, according to the company’s most recent earnings report. Additionally, the company’s income from its cryptocurrency trading division fell by 30% year over year, from $54 million in Q1 2022 to $38 million in Q1 2023.
The business X1 claimed to have a waiting list of 500,000 people who would like to use its credit card services in 2022, while its present valuation is still unknown. Since 2020, X1 has attracted more than $60 million from VC companies like Craft Ventures, Soma Capital, and FPV, the latter of which was co-founded by Wesley Chan, a financier of Plaid and Robinhood.
By purchasing X1, Robinhood hopes to diversify its product offerings, enter the credit card market, and increase its revenue potential by utilizing the startup’s cutting-edge approach to income-based credit cards.