Robinhood gave a very sweet deal to investors like Ribbit Capital, NEA, and Index when they saved it from the GameStop meme-stock drama

• Robinhood’s rescue investors are set to consummate a very special deal on IPO day.
• They stepped in to save the company when it needed billions in cash to cover regulatory deposits.
• Now they could nab Robinhood stock at a 30% discount, collecting billions of extra profit.

No matter what happens during Robinhood’s highly anticipated first day of trading as a public company, there’s a group of investors that will automatically make extra profit.

They are the investors that stepped up to rescue the company when it got caught in the crosshairs of the GameStop and AMC short-seller mania last winter. At the time, Robinhood was forced to stop trading those stocks until it could pony up a boatload of cash to cover massive increases in regulatory deposits demanded by The Depository Trust & Clearing Corporation (DTCC).

A handful of investors, including Ribbit Capital, Iconiq, New Enterprise Associates, Index Ventures, Sequoia and Andreessen Horowitz (a16z), came to the rescue to supply $3.5 billion of emergency cash.

And Robinhood offered them a deal that gives them practically guaranteed returns from its IPO on their rescue money, it disclosed in its S-1.

These investors bought convertible notes, with Ribbit Capital leading the way, taking $502 million worth, or 14% of the total, and Index Ventures and New Enterprise Associates nabbing another 4% between them, Net Interest’s Marc Rubinstein calculated.

With these notes, the investors can convert them into Robinhood stock at a 30% discount — and possibly more — from the IPO price. Right now, based on Robinhood’s current expected IPO price range, it looks like these investors are headed for the discounts.

Rubinstein also calculates this group of investors will collectively collect $2 billion in profit from their bailout investments, or a 60%-plus return in a matter of months.

While all of Robinhood’s investors are anticipating a celebration on IPO day, should the IPO be a hit, it should be particularly sweet for the founder and managing partner of Ribbit Capital, Meyer “Micky” Malka.

Malka, an immigrant from Venezuela, started Ribbit in 2012 after selling his own financial services startups. His mission was to invest exclusively in fintechs back in those post-2008-financial-meltdown years, when other investors wouldn’t touch them, as Insider’s Melia Russell previously reported.

He made long bets on companies like Credit Karma, Coinbase, Affirm, Wealthfront, and Robinhood. He doubled down on Robinhood with that bailout cash.

Ribbit had $4.3 billion in assets under management at the end of 2019, according to a report in The Wall Street Journal, but its recent returns on these fintech stars have catapulted Ribbit and Malka into the next league.

Robinhood declined to comment.