Zecco raises $25M to beat crowd on zero-dollar trading

Zecco, the online brokerage that hopes to use social networking to drive traffic, has raised $25 million more in financing.

We wrote in detail about this company’s promise here, concluding that the zero-dollar trading service it offered is here to stay. It has now raised $35 million.

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The company, now based in Burlingame, Calif., is growing at a break-neck pace — at least on the employee front: It plans to hire about 65 people by the end of next year, adding to its 84 now — and its only a year old. The company says it wants to be profitable by next summer. It makes money from interest earned on account balances of its members, as well as charges from special services, such as $4.50 per option trade. It also plans to make money from advertising.

Zecco lets investors with a $2,500 balance in their account to make 10 free stock trades per month. It says it has 60,000 account holders and 85,000 community members. The majority of members are cheapskates, however, holding the minimum balance and enjoying the free trades, but not more. So its tough to know when and how this company will get out of the woods. We mentioned it had some hiccups, with users initially finding the site cumbersome. There’s also the challenge posed by bigger incumbent brokers, who are moving in the direction of free-trading.

The round was led by Velocity Capital and original investor Morten Lund, an early investor in Skype. Zecco has a post-money valuation of about $100 million.