Estonia's tech elite are getting behind a European challenger to Robinhood

Some of the biggest names of Estonia's tech country are backing Lightyear, a startup looking to go Europe's reply to commission-free trading pioneer Robinhood.

Based successful London, Lightyear develops an app that lets users put successful a scope of implicit 5,000 stocks, exchange-traded funds and wealth marketplace funds. It was founded by 2 erstwhile Wise employees, Martin Sokk and Mihkel Aamer, successful 2021.

The institution is acceptable to denote aboriginal connected Thursday that it has raised $23 cardinal successful a caller circular of backing led by NordicNinja, a Japanese-backed task superior money based successful Europe. Estonian tech entrepreneur Markus Villig, who co-founded ride-hailing unicorn Bolt has besides invested.

Lightyear CEO Sokk told CNBC that the steadfast didn't needfully request to rise much currency for the concern but chose to bash truthful due to the fact that of the caliber of investors involved.

"People similar Markus person been gathering monolithic companies successful many, galore markets, and this is thing that's truly breathtaking for america due to the fact that it's truthful hard to spell into each the markets and recognize their section dynamics and what radical need," helium said.

Lightyear presently operates successful 25 countries. However, with assistance from angel investors similar Bolt's Villig, the steadfast volition beryllium capable to motorboat successful different 5 markets "pretty quickly," Sokk said.

Villig told CNBC that it tin beryllium "challenging to standard a concern crossed aggregate countries successful a heavy regulated sector," adding that Europe's little developed retail investing marketplace provides ample opportunities for disruption.

Other Estonian angel investors who person antecedently backed Lightyear besides participated successful the backing round, including Wise co-founder Taavet Hinrikus, Checkout.com's former Chief Technology Officer Ott Kaukver and Skype founding technologist Jaan Tallinn.

Estonia is wide considered a salient tech hub successful Europe. The state is location to the highest fig of unicorns per capita successful Europe, according to the Estonian Investment Agency. Meanwhile, Estonia's e-residency scheme has besides enabled foreigners to go integer residents and motorboat their companies successful the country.

The caller circular values five-year-old Lightyear astatine betwixt $200 cardinal and $300 million, importantly higher than its valuation successful 2022 erstwhile it raised $25 million, according to 2 radical acquainted with the substance who preferred to stay anonymous arsenic the accusation has not been made public.

Alongside the further funding, Lightyear is besides launching caller artificial quality features. AI has been a blistery country of concern for startups pursuing the explosive popularity of generative AI services similar OpenAI's ChatGPT.

One of the features, called "Why Did It Move," allows users to prime a constituent successful clip connected a banal illustration and spot what happened that time to origin a leap oregon autumn successful a company's stock price. The steadfast is besides utilizing AI to supply "bull" and "bear" theses connected stocks arsenic good arsenic abbreviated updates connected assets successful their ain portfolios.

"In the end, you're going to person 2 models" erstwhile it comes to investing, according to Sokk: "Self-driving money," wherever you inquire an AI to execute definite concern goals, and a "manual gearbox" attack of figuring retired antithetic strategies and approaches connected your own.

Still, the marketplace for online concern products is heavy competitive. Lightyear faces immoderate hefty contention from some incumbent brokerage services arsenic good arsenic much modern tech players specified arsenic Robinhood, Revolut and Trade Republic.

However, Sokk insists Lightyear is gathering a differentiated capable merchandise to basal retired from the crowd. While competitors similar Robinhood nett from offering risky products similar crypto and borderline trading, Lightyear is focused connected serving semipermanent investors, helium told CNBC.

To that end, Sokk said Lightyear is readying connected rolling retired a crypto merchandise of its ain successful 2 months' clip — 1 that's "more focused connected a semipermanent view."