What do actor Jared Leto and rappers Snoop Dogg and Nas have in common? Besides signature looks and big bank accounts, they are co-investors in Robinhood, a new app that aims to make trading stocks simple and free.
At the moment, average Joes who want to invest go online or call someone at a brokerage such as E*Trade (ETFC) or Charles Schwab (SCHW). Those companies typically charge $7 to $10 fees per trade.
Robinhood wants to eliminate those commissions and make trading as easy as ordering a car on Uber or Lyft.
"The reason why other brokers charge between $7 and $10 a trade isn't because it costs that much to execute a trade. That $7 to $10 is going toward marketing budgets and brick and mortar locations," says Vladimir Tenev, co-founder of Robinhood.
So far, the app is hitting a lot of bull's-eyes. Half a million people are currently on the wait list to download the app when it comes out of the testing phase, likely in early 2015, the company says. Customers who use the app also will not have to hold any minimum amount in their accounts.
Related: Why are so many people excited about Robinhood?
Robinhood announced $13 million in additional seed funding on Tuesday. Investors in the latest round of financing include Index Ventures, which backs many Silicon Valley startups; Howard Lindzon, one of the founders of Stocktwits; and the three mega celebrities, among others.
"What [Snoop Dogg and Nas] got most excited about is our customers are the people who listen to their music," Robinhood co-founder Baiju Prafulkumar Bhatt told CNNMoney. Bhatt noted the stars have been helpful advisers since they are also business owners.
Tenev and Bhatt were roommates at Stanford University who then went to work on Wall Street building high-frequency trading (HFT) platforms for financial institutions. Now in their late 20s, they are back on the West Coast trying to bring the Silicon Valley sensibility to the stock market.
The goal of their app is to appeal to the mass market. As CNNMoney has reported before, only 14% of Americans own and trade individual stocks -- that's less than half the number of people who have a cat.
"The ability to participate in the stock market is a huge privilege that we as Americans have," Bhatt said. "Getting it more accessible to large audiences is a huge opportunity."
