Social investment platform eToro buys fintech startup Gatsby for $50 million – TechCrunch

Multi-asset social investment network and Robinhood competitor eToro have signed a definitive agreement to buy Gatsby — a fintech startup that also aimed to go after Robinhood — for $50 million in cash and common stock deal.

Israel-based eToro told TechCrunch this week that it just received approval from FINRA, Financial Industry Regulatory Authority, to proceed with the acquisition. The company first applied for regulatory approval in December 2021.

Jeff Myers and Ryan Belanger-Saleh founded Gatsby, a commission-free options and stock trading app aimed at younger traders, in 2018. The pair had a previous successful exit in Dealtable.com, a social data room platform.

TechCrunch reported on the New York-based startup $10 million Series A raise in mid-March 2021. Backers include Techstars Ventures, Beta Bridge Capital, Barclays Bank, SWS Venture Capital, Rosecliff Ventures, a network of “super angels” placed by ClearList and an oversubscribed SeedInvest campaign.

Gatsby’s target customers are Gen Zers and millennials, and it told me it aimed to give people “a safe and fair platform to trade on without users having to worry about getting in over their heads or being locked out of names when volatility increases.” The app was launched in iOS and Android in early 2020.

The company’s entire team of 20 people will join eToro.

Yoni Assia, CEO and co-founder of eToro, told TechCrunch that the purchase would allow his company to expand the range of its US product, which is currently focused on stocks and crypto.

“The integration of Gatsby will allow us to provide US users with a safe and easy way to trade options, giving them more flexibility to use new strategies,” said Assia. “We believe that options can offer private investors opportunities to generate returns in today’s more challenging market environment. Scaling our US operations is a key goal and we are excited to partner with the Gatsby team.”

The departure certainly appears to be a good outcome for Gatsby and its investors.

Gatsby co-founder Jeff Myers told TechCrunch that the startup was not “planning to end the Gatsby story yet.”

“But the product and vision fit between Gatsby and eToro was undeniable,” he said. “We have long admired Yoni and the team he has built and are very excited to continue our journey together with eToro.”

Ryan Belanger-Saleh, Gatsby Co-CEO, echoed Myers’ sentiments.

“They have truly been the pioneers of social investing, and we’ve always seen them as the cool older sibling we’d like to hang out with,” he said in a written statement.

EToro has grown impressively in recent years. The company currently has more than 30 million registered users in over 100 countries. This is up from 10 million at the end of 2018, 12.3 million at the end of 2019, 17.5 million at the end of 2020 and 26.9 million at the end of 2021. The number of funded accounts is over 2.7 million.

The company generated total commissions of $1.2 billion in 2021, a growth of over 400% compared to 2019, according to Assia.

Gatsby, for its part, says it has seen roughly 900% growth in its average month-over-month options contracts since the start of 2020.

The acquisition marks eToro’s fourth major since its inception in 2007. It previously bought investment tracking app Participate; Marq Millions Ltd.a UK-based e-money business that helped it build and launch eToro money, its e-money account; and Company, a smart contracts/blockchain business that became eToro Labs, the fintech’s in-house blockchain innovation and R&D unit.

In March 2021, eToro announced plans to go public via a merger with SPAC FinTech Acquisition Corp. V in a massive $10.4 billion transaction. While the transaction was set to close in the third quarter of 2021, eToro announced in July that the deal had been done concluded.

“Due to the current market conditions, we remain private,” Assia told TechCrunch. “We continue to see going public as part of eToro’s future and will wait for the right opportunity to take this next step.”

M&A in the fintech world has been on the decline, so the eToro/Gatsby deal is a bright spot in a year full of ups and downs.

Meanwhile, Robinhood’s stock has taken a beating lately, and the company has temporarily laid off around 1,000 people since the start of the year. At press time, the company was trading at around $10.90 after hours, significantly lower than its 52-week high of $52.06.