The catch Robinhood agreed to in its $3.4B funding round

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It was the last week of January, and Robinhood needed to raise money fast. The morning of Jan. 28, the brokerage received a demand for a staggering $3 billion—capital needed to back its customers’ unprecedented trading in meme stocks like GameStop and AMC Entertainment. 

Robinhood immediately went to market. The Menlo Park, Calif.-based brokerage raised $1 billion in capital in a matter of 24 hours. Within four days, the company had received commitments from its investors for a total of more than three times that: $3.4 billion.