NY-based Stash started in 2015 with a realization that investing was not accessible for many young adults . In six years the subscription-based service has passed Unicorn status as it helps young professionals enter the world of investing long before they hit a six-figure income. The platform includes digital investing, banking and financial education. In the summer of 2017, they had reached 1 million users; a few short years later, the company is exploring an IPO as it seeks growth beyond its five million+ registered users. According to Stash, they have $3 billion in assets under management and approximately $100 million in annual revenues.
TL;DR
- Stash was founded in February 2015 by Brandon Krieg, David Ronick, and Ed Robinson.
- The idea behind Stash at the start was to create a financial subscription service that helps people create, make progress towards and reach their financial goals.
- Stash has raised a total of $427.4 million. Leading investors include: Union Square Ventures, Coatue, and Goodwater Capital.
- Stash reached $43 million in annual revenue in 2019 and now is poised to hit $100 million revenue in 2021.
- There are approximately 500 customer service complaints about Stash on the Better Business Bureau website. Each complaint appears to have been addressed by the company.
- At their last round of funding in Feb 2021, they were valued at $1.3B. They haven’t chosen yet between a traditional IPO and a SPAC-merger as avenues to go public.
Related: What is a SPAC?
Stash at a glance
Stash was founded by Brandon Krieg, David Ronick and Ed Robinson in 2015. The initial premise of the company was that everyone should have access to investing. The founders were no strangers to Wall Street. Krieg is the co-Founder of Collective Returns, Inc. and has been its CEO since July 2016. In addition to being co-founder of Stash, Ronick is co-Founder of an LP in the Fund and leading mentor at TechStars. Robison also is a Wall Street veteran with a myriad of experiences that particularly prepared him for helping to found Stash. Their initial funding was from undisclosed angel investors in an undisclosed amount; but the past successful Wall Street track record of the founders surely helped them to secure funding.
They led the way with unique options at the time such as fractional investing and their app achieved early recognition for its capabilities such as CNBC in February 2018 praised the automotion and ease of use features. They were recognized in the Wall Street Journal’s 2018 “Top 25 Tech Companies to Watch”. Also in 2018, they were a MarCom Awards Double Gold & Platinum Winner. In 2019 they were on the Forbes Fintech 50 and the LendIt Fintech Innovator of the Year lists. From 2019-2021, each year they were on Built in NYC’s Best Places to Work list. Also in 2021 they were on the NYC Best Midsize Companies to Work For list and the NYC Companies with the Best Benefits list.
Their guiding principles are summarized on their website succinctly as: “We create financial opportunity. We’re here to help everyday Americans invest and build wealth, $5 at a time.” Values they emphasize are: individuality, accountability, empathy, integrity and quality. “ From day one, Stash was built for long-term, diversified investing, not day trading,” said Vinod Raman in June 2021, Vice President of Product for Investing at Stash. “It’s why we operate with just four trading windows, and do not offer options or margin trading.”
The business model that Stash uses is a layered subscription model, meaning the cost of the subscription depends on how many services the client wants to use. Subscriptions range from $1-$9 per month. This affordable subscription fee underscores how much Stash wants to focus on those who have not already amassed large nest eggs. Users can invest as little as $1 per transaction but Stash shares that the average investment made on its platform currently is $31. Their average consumer has an annual income of less than $50,000 and is about 29 years old.
Ronick left Stash to found and lead Minded, a direct-to-consumer telehealth company that focuses on depression and anxiety. Krieg remains as CEO and Robison is the President. Additionally the company has recently brought on former Fastly Inc. CFO Adriel Lares to serve as Stash’s new CFO and former Lyft Inc. executive Jon McNeill to serve as Stash’s first independent director in advance of the IPO. These two high profile executives bring additional industry knowledge and acumen to lead the company in this next phase, especially with Lares having overseen Fastly’s IPO in 2019.
Stash is an online platform which offers three types of investment accounts: personal brokerage accounts, retirement accounts and custodial investment accounts. People access their accounts either via an Android or iOS app or on their web browser of choice. There are three subscription levels which vary in cost based on the amount of available services:
- Stash Beginner: This level costs users $1 per month. Services provided are investing, basic banking, a Stock-Back card, savings strategies, portfolio recommendations and $1k in life insurance.
- Stash Growth: This level costs users $3 per month. Services provided are investing, basic banking, a Stock-Back card, savings strategies, portfolio recommendations, $1k in life insurance, Smart Portfolio®, Retirement Portfolio® and tax benefits for retirement investing.
- Stash+: This level costs users $9 per month. Services provided are investing, basic banking, a Stock-Back card, savings strategies, portfolio recommendations, Smart Portfolio®, Retirement Portfolio®, tax benefits for retirement investing, Kids’ Portfolios®, Stock-Back card bonuses, 2x the stock with the Stock-Back card, premium research and advice, $10k in life insurance.
Stash fundraising to know about
Stash has raised a total of $455 million in 10 rounds of fundraising. Here’s a breakdown of the key Stash fundraising over the years:
- Startup: Aug 2015, raised $1.5M+ from undisclosed, angel investors
- Debt Financing: Aug 2015, raised $1.1M from an undisclosed source
- Seed: Feb 2016, raised $3M, led by Goodwater Capital
- Series A: Aug 2016, raised $9.3M, led by Goodwater Capital and Valar Ventures
- Series B: Dec 2016, raised $25M, led by Valar Ventures
- Series C: Jul 2017, raised $40M, led by Coatue
- Series D: Feb 2018, raised $37.5M, led by Union Square Ventures
- Series E: Mar 2019, raised $73M, led by undisclosed investors
- Series F: Apr 2020, raised $112M, led by LendingTree, $700M valuation
- Series G: Feb 2021, raised $125M, led by Eldridge, $1.3B valuation
Acquisitions:
In June 2021, Stash acquired its first company, PayGrade, a financial platform for schools to virtually teach real world finances for an undisclosed amount. It will continue operating as a subsidiary. Stash already had a financial literacy arm called Stash Learn. Stash and PayGrade will add to the existing education capacity by expanding PayGrade to help parents teach financial literacy to their children.
Trademarks and Patents:
Stash has 47 registered trademarks and one registered patent.
Path to the Stash IPO
Stash surpassed unicorn status in early 2021 with its $1.3 billion post-money valuation in February 2021 after its Series G funding. It isn’t clear whether they have always aimed for going public. But it is clear that they have always had exponential growth as their goal. They are using the services of Goldman Sachs to help them explore their options. Goldman Sachs declined to comment on the deal but last month founder and CEO Krieg was quoted as saying, “Goldman Sachs acts as our adviser and we continuously assess the market to determine our optimal financing strategy.”
People in the know have shared off-record that Stash is considering both a SPAC-merger and traditional IPO options. They expect it to be during 2021 but Stash has yet to file any SEC paperwork. Their lead investors are: Union Square Ventures, Coatue, Goodwater Capital, Valar Ventures, Eldridge, and Lending Tree. To date, none have commented on the potential IPO.
Related: You can learn more about IPOs here.
What investors should know about the Stash IPO
All investments have risks. Let’s explore what type of risks investors might need to consider with a Stash IPO. The major risks for Stash lie in cybersecurity, competitiveness of the market and whether the methods they choose for expansion help them to turn a profit.
First let’s discuss cybersecurity. Stash is vulnerable to this issue in three ways. First, they have to make sure they verify that their registered users, they call them Stasher, are truly who they say they are. Second, they have to have the right security measures to protect Stashers investments and Stasher’s transactions to transfer money into their Stash accounts for investment purposes. Finally they have to continually remain on the cutting edge to prevent any hackers from taking down the site or stealing Stashers’ money. Being a FinTech firm, Stash has consistently been on the cutting edge of usability and safety from it’s beginning.
Next let’s observe that this has become a crowded market. Stash has many competitors. The traditional brokerage firms such as Fidelity and Merryl Lynch are launching or have launched their own apps to capture young professionals and early career investors. And there are many newcomers in the space that are also FinTech companies seeking to shake up the industry such as Robinhood, Acorns, Mint, NerdWallet, Revolut and Coinbase. Mint, Revolut and Coinbase have gone public. Robinhood remains a private company. Acorns just recently went through a SPAC-merger to go public in May 2021. NerdWallet is also exploring an IPO. While Stash has well over 5 million users, only 2.1 million are active. They have stiff competition to increase their market share in this crowded space.
Third, we have to consider whether Stash will be able to continue expanding. Even though revenues have nearly doubled in recent years, they have yet to turn a profit. So far their growth has occurred in two ways: adding services and acquisitions. As they have grown over the years, they originally were only for investing, but now they are a complete financial subscription service that covers budgeting, banking, investment advice and learning, saving for retirement and saving for children’s college. They have also grown by acquisition – so far they’ve acquired one company which allowed them to expand their offerings without investing in creating that infrastructure from scratch. As they consider an IPO they will need to balance the need for growth in users with any additional expansion so that they can reach profitability sooner than later. Demonstrating their optimism is the fact that they are hiring – especially in the engineering and product design areas. This is a good indicator that they may be planning to either create new services or more soundly resource the existing ones.
Bottom line
Stash is exploring an IPO and will choose between a SPAC-merger and a traditional IPO with the help of advisors from Goldman Sachs. The infusion of capital will help Stash capitalize on the post-pandemic trends of people being more aware of their financial futures and wanting to plan for them. If Stash can continue providing services that attract and retain paying Stashers, then there is the potential for growth.
Related:Why new IPOs aren’t available at market open
