Robinhood, an American fintech has entered into an agreement to acquire San Francisco-based X1, a startup offering a no-fee credit card, for $95 million in cash. With this acquisition, Robinhood will enter into the credit card business, which involves interchange fee revenue. The acquisition is expected to close sometime in the third quarter of 2023.
X1 offers an income-based credit card with numerous rewards. To date, the company has raised a total funding of $2 million in VC funding from Soma Capital, Craft Ventures, FPV, and Spark Capital since its debut in 2020. Recently, the company bagged $15 million in late 2022, which boosted its valuation by 50%. However, there is no word on the exact valuation of X1 for now.
As per Robinhood, this acquisition is an important step in its journey towards broadening its product offerings and strengthening its relationship with existing users. This acquisition comes at a time when Robinhood’s crypto trading has slowed down and its core trading business dropped in recent times. Apparently, it looks like the company desires to diversify its business.
As a result of the acquisition, the X1 team will be moved to Robinhood. X1’s co-founders Deepak Rao and Siddharth Batra will oversee this new business for the company, with Rao serving as GM of Credit Cards.
“This acquisition will bring us closer to our goal of serving the entirety of our customers’ critical financial needs. Together with X1, Robinhood will now be able to offer our customers access to credit,” said Vlad Tenev, CEO and co-founder of Robinhood.
“When founding X1, we set out to create a different kind of credit card with an unparalleled experience for customers, similar to Robinhood’s mission to make our financial markets more accessible to all. We share the same ethos and joining together with Robinhood we’ll be able to offer an enhanced credit card experience,” said Deepak Rao, CEO and co-founder of X1.
X1’s stainless steel credit card
X1 offers a no-fee credit card with rewards on each purchase. The X1 stainless steel credit card has no annual fees, late fees, or foreign transaction fees. Further, design innovation is a part of Robinhood’s DNA and X1 brings the sleek and intuitive mobile app experience to the former’s customers.
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