NEW YORK (Reuters) - Stash, a New York-based startup that lets individuals save small sums of money and make micro-investments through a mobile app, has secured a $40 million investment in a round led by fund manager Coatue Management.
Existing investors including funds Breyer Capital, Goodwater Capital and Valar Ventures, the venture capital firm of PayPal co-founder Peter Thiel, also participated in the new round, Stash said on Thursday.
Stash has developed a mobile app that seeks to make it easier for low-income consumers in the United States to start saving and investing.
Starting with as little as $5, users can pick from a batch of over 30 exchange-traded-funds curated by the company’s investment team.
The app, which charges $1 per month for accounts under $5,000, also offers the option to set automatic investments to help users grow their “stash” over time. It charges a 0.25 percent annual fee for accounts over $5,000.
Stash is among a growing cohort of tech-savvy investment managers taking advantage of automation and digital technologies to service consumers usually overlooked by the mainstream wealth management industry.
“We help people who don’t have a lot save money on a weekly basis,” Brandon Krieg, chief executive and co-founder of Stash, said in an interview. “Stashers look like America, they look like people you meet every day: they are nurses and teachers and Uber and Lyft drivers.”
Stash services 850,000 accounts, having added over half a million investors on its platform since the start of the year alone. Around 86 percent of its users are first-time investors, it said.
Stash’s monthly subscription model for smaller accounts sets it apart from more established online wealth management startups known as robo-advisors, who typically only charge fees based on assets under management.
This makes the company’s revenue stream less reliant on quickly growing the amount of money their clients invest through their platform, Krieg said.
Robo-advisors, however, will not generally allow their customers to pick the ETFs they invest in but use computer algorithms to create and manage portfolios based on their risk profile.
Stash, which has raised $78 million in less than two years, will use the latest injection of cash to enhance its technology, expand its team and launch new products, it said, including a new platform for simplified retirement saving.
Reporting by Anna Irrera; Editing by James Dalgleish