Stash, a New York-based mobile app that allows users to save or invest very small sums of money, has secured a $40m investment in a round led by fund manager Coatue Management.
The size of the investment demonstrates the growing popularity of such apps, which use fintech developments to open up the world of investing to those on low and middle incomes.
Apps such as Stash use fintech developments to open up the world of investing to those on low and middle incomes
As individuals can open a Stash account with as little as $5, the app breaks down the financial barriers that used to prevent those without access to substantial capital from investing. Stash also eradicates knowledge barriers by giving users a curated choice of 30 exchange-traded funds to place their money with, doing away with the massive choice of investment options that can overwhelm first-time investors.
The cheap simplicity of Stash’s approach to investing has seen the platform soar in popularity, with more than half a million investors joining the app since the start of this year alone. Stash currently hosts 850,000 accounts, with a user base that is 86 percent first-time investors, as reported by Reuters.
The steadily growing user base makes Stash an attractive investment option. Including this latest funding round, the company has raised $78m in the past two years, with existing investors including the likes of Goodwater Capital and PayPal co-founder Peter Thiel.
In an interview with Reuters, Brandon Krieg, CEO and co-founder of Stash, described how the company’s subscription-based business model is also attractive to investors since it generates a constant revenue stream and does not depend on pursuing aggressive investment options to grow user money very rapidly.
Stash’s subscription service charges accounts containing less than $5,000 a $1 monthly fee, while those accounts worth more than $5,000 are charged an annual cost of 0.25 percent. This means that for users investing in Stash, risk levels are kept relatively low.
The popularity of platforms such as these, made possible by the prevalence of smartphones and developments in technology allowing fast fund transfers, is set to grow over the coming years, particularly among the largely untapped market of low and middle-income potential investors. Krieg noted: “Stashers look like America, they look like people you meet every day: they are nurses and teachers and Uber and Lyft drivers.”