Stashinvest is a Fintech company that primarily offers various financial products aimed at attracting American retail investors. The fintech market comprises sales of technology and platform-based financial services and some other related goods. This industry implements technology and innovation in its work processes to provide financial services to customers through internet-based service platforms. In 2019, the global fintech market reached a market value of around $111,240.5 million and is expected to grow to around $191,840 million in 2024, $191,840 million in 2025, and around $325,311 million in 2030.
The witnessed growth in this sector has come as a result of growth in the market, increased funding and investments in fintech companies, increased interned reliability, and an increase in the amount of disposable income. The increasing popularity of digital payments and blockchain technology will drive this sector to greater heights in the coming future.
Today, we will be discussing the Stashinvest business model in detail and explore its various business processes to answer- “How does stashinvest work?” and “How does stashinvest make money?”. Keep reading this article till the end to get your answers and learn everything about the fast-growing startup company, Stashinvest.
Stashinvest- The Beginning
Stashinvest is a financial technology company based in New York, USA. It was founded in February 2015 by Brandon Krieg, David Ronick, and Rd Robinson. All three of them already had immense experience in the field of entrepreneurship and finance before starting up with Stashinvest.
Back in 1988, Krieg used to work in EdgeTrade where he helped the company to grow. In 2007, EdgeTrade was acquired by Knight Capital for $59.5 M. Krieg started giving his next 5 years to Knight to help with the integration of EdgeTrade. Soon he started working with Macquarie where he developed a good relationship with Robinson. Consequently, the two decided to team up and launch a company of their own. Later, David Ronick, a person with years of experience in launching his own business, joined them as the third co-founder.
For the first few months, the team kept on talking to people and analyzing the market related to money management, investing, and saving. Then finally in February 2015, they started working on an iOS app and launched it along with the Android version of itself. Before the launch, Stash already had 50,000 people already signed up.
Stash had gained early exposure because of the team’s marketing strategy. Before the launch, they had built a hype about their business by conducting interviews in various business and finance-related publications. In the beginning, Ronick was the CEO of Stash but left the company within a year of its launch.
Although in the beginning, the team raised a $15 million angel round from friends and family, in 2016, the startup was successful in raising $37.3 M. The huge prior experience of the team was of great advantage as they already knew about their customer demography. Their target customers were mainly the millennials having an annual income of about $50,000. The company allowed its users to start trading with just $5. Also, its business model is emphasized on educating the users using quality content.
This was a great start for a startup company. Soon the team planned on expanding its product offering by adding features to the platform that were developed by considering the customer’s exact needs. In a nutshell, the company’s founders had a great customer understanding which led them to successfully raise money through the Stash business model.
Stashinvest Business Model
Stashinvest is one of the fastest-growing financial startups in the US today- reaching a million users in its three years of launch. It aims to make it easier for deprived, and less-income users to invest in the stock market. The platform uses a micro-investing model where users can make more periodic investments at fractional dollar amounts. The uniqueness of starting with a small dollar amount has attracted a large number of first-time investors, more specifically, the Gen Y group. This particular group had otherwise stayed out of the stock market for a long time. Stashinvest platforms act as a Robo advisor for “Stashers” (users of Stashinvest).
As earlier mentioned, Stashinvest particularly targets low-income millennials who are new to the world of the stock market. The platform allows them to enter the market with a minimum investment of $5. The service is available on the web as well as on its mobile app. It repackages existing funds and then helps its users navigate and select the best investment option. Stash considered providing quality content to its users so the company has made a huge investment in sharing valuable content in the form of a blog. These contents help the company to sell themselves as a Robo advisor and help the users in understanding finances better with those articles.
Services and products offered by Stashinvest
Let’s talk about the products and services included in the Stashinvest business model. The company typically offers banking, retirement, individual investment, and custodial accounts through its subscription model.
Users can take advantage of the services through the web as well as its mobile app. They can invest as little as $0.01 increments into fractional shares of thousand stocks. They (users) can invest in personal accounts, retirement accounts, Roth IRAs, traditional IRAs, or custodial accounts. The platform also offers its users to automate investing in order to make the service more easy and efficient. Along with this, the content offered by the platform to its users is very helpful in educating them about finance and the market.
Stash offers financial advice and news to its users via its website and mobile app to help them in making financial decisions and enhance knowledge. For adults, there is StashLearn where users are provided with all the money news, stock market news, financial advisories, and other related articles in the form of blogs. They have content for adults with kids in the section- “StashLearn” where the content shares with parents the right way of giving financial knowledge to their kids. Here, parents are given advisories on topics such as teaching to count money, sorting coins, money values, etc.
Features of Stashinvest
Now that we have discussed the Stashinvest business model in detail, let’s move on to discussing some of the features of Stashinvest. These features will let you understand why most of the users are choosing Stashinvest over any other platform present on the Internet.
- Automatic investing: Stashinvest platform has the feature of automatic investing where fractional shares are calculated automatically to make it easy for people to invest what the user can afford on a set schedule.
- Investing with Stock-Back card: For a user to be eligible for a Stash banking account, they must have an opened taxable brokerage account on Stash. Stash Visa Debit card is issued by Green Dot Bank. If the user has this card he/she can invest easily with every swipe. Also, the everyday card issued will help him/her earn stock while shopping.
- Affordable plannings: Stashinvest allows the user to invest easily using three subscription plans which makes investing affordable and easy.
- Banking: Stashinvest helps its users to use banking facilities better with no hidden banking fees and access to early payday through direct deposits.
- Retirement: Stashinvest offers investments for retirement to allow users to invest for their secured future. Also, it offers both Roth or IRA accounts.
- Family investments: Stashinvest offers children’s investment accounts to fulfill the long-term goals of users with families. Users can also avail life insurance offers.
…and many more. These features and financial services are accessible using the subscription plans offered by the company such as Stash Beginner, Stash Growth, and Stash+. We’ll discuss more of this later in the article.
Commission and Fees
Earlier, Stash used to charge a 0.25% wrap fee annually for its advisory services, with an additional $1 minimum per month for taxable accounts and $2 for retirement accounts. In August 2019, this fee structure changed to a tiered structure with $1 a month for the Beginner account, $3/ month for the Growth account, and $9/ month for all the Plus account subscribers.
How does Stashinvest work?
Stash, a fintech company, acts as a personal finance application for its users offering a variety of products for investing and saving purposes. Let’s understand its working process to answer the question – “How does Stashinvest work?”
Stash is the best option for new investors who want guidance while selecting investments. It provides valuable financial education to the users through its educational content and support. To get started with stashinvest, a user has to go through the signup process and create an account on the platform. During the signup process, Stash asks many questions from the user to determine the user’s level of risk tolerance as well as individual’s financial goals. This information helps the platform to offer efficient and relevant advice regarding the user’s financial activities such as budgeting and investing.
After providing all the information, the user has to pick a subscription plan which starts at just $1 per month. With Stash, one can get access to investing with a personal brokerage account, Stock-Back card, budgeting and investing tools, advice and education, and life and family insurance coverage through Avibra. Depending upon the plan the user chooses, he/she can also open an individual retirement account (IRA) or an investment account for his/her kids.
Consider yourself as a user and that you have chosen a subscription plan of Stashinvest to get started. Now, you can add money to your Stashinvest account, automatically. To do this, you can either set up a direct deposit to send money or you can receive your paycheck up to 2 days early. There is also a feature on the platform that allows users to use automatic budgeting and savings tools to organize the cash into different spaces, create goals, and even track expenses. Once the cash is added to the Stash account, you can choose to invest in fractional shares of thousands of stocks present in the platform’s listings with $5 or less or make purchases with a Stock-Back card and earn stock on Stash as you spend the cash.
Who are stashinvest’s investors?
The big tech companies are aiming at providing financial services to customers which is resulting in the positive growth of the fintech market. Today, most investors are interested in investing in fintech companies because of the positive growth expected in the coming future. With the increasing mobile payment technology and the growing popularity of blockchain technology, it is undoubtful to believe in the growth of the fintech market in the future.
According to Crunchbase, Stashinvest has successfully raised a total amount of $427.4 million of investment in over 10 funding rounds. At the present time, Stashinvest has 12 investors in total, out of which, 6 are the lead investors. Entree Capital and T. Rowe Price are the most recent investors of the company. This latest funding was raised on 3 Feb 2021 from a Series Ground.
Some of the investor company names available on Crunchbase are Entree Capital, T. Rowe Price, Eldridge, Goodwater Capital, Owl Ventures, Lending Tree, and Greenspring Associates.
Until now, Stash has made only 1 acquisition. On 23rd Jule, 2021, Stash has successfully acquired PayGrade.
How does Stashinvest make money?
Stashinvest makes money from its users through its subscription model, referral fees from the cashback program, payment for order flow, and returns on funds that the card owner holds. Let’s discuss all these revenue streams in detail to understand the Stashinvest revenue model in a better way.
- Revenue through Subscription plans:
Stashinvest offers three types of subscription plans i.e., Stash Beginner, Stash Growth, Stash +. The features of these subscriptions are:
- Stash Beginner: This subscription plan is available at $1 per month. In this plan, users are offered various basic facilities such as an advice facility for beginner investing, investing access (Personal Portfolio), banking access (you can get paid up to 2 days early), insurance access with $1K life insurance offered by Avibra.
- Stash Growth: This subscription plan is available to users at $3 per month. In this plan, users get everything that the Stash Beginner plan consists of but in addition to this, financial advice is given to such users for growing personal finances, and also access to investing (Smart Portfolio and Retirement) is offered here.
- Stash+: This plan offers advanced features to its subscribers for $9 per month. Everything in Stash Growth is involved in this plan but in addition, users also get- Advice for family finances, Stash + market insights, investing access with 2 kids portfolio (custodial accounts), banking access (2x times with the Stock-Back Card), and insurance access with $10k life insurance offered by Avibra.
- Revenue through Cashback rewards:
Stashinvest offers cashback rewards to its users with a Stock-Back card. Whenever a person makes the payment using the debit card at a Stashinvest partner shop, a percentage of the amount spent on the purchase is used automatically in buying fractions of that firm’s stock. Users can earn cashback rewards of up to 5 percent. Stash makes money every time a user uses a Stock-Back card in making payments. In such a scenario, the company receives a fraction of the reward in exchange for encouraging users to shop at a partner’s store.
- Revenue through Payment for order flow:
This is also one of the income sources of the Stashinvest business model. This revenue model of payment for order flow is being used by most of the modern-day online broker platforms.
Whenever a user places an order on the stock using the Stash platform, the order is sent to the market makers who compensate Stash in exchange for bringing in deal flow.
- Revenue through Interest on Cash:
Stash works like a bank by using the cash residing on user accounts and lending out to other institutions. Then, they collect interest from such institutes.
As per experts, if we consider the growth potential of the Fintech market by the type of service then the insurance market will arise soon which will gain thousands of millions in the global annual sales by the year 2023. The coming fintech businesses must focus on integrating emerging technologies such as Blockchain technology, artificial intelligence, machine learning, mobile payment methods, and partner with other financial organizations to grow their customer base.
In 2019, the payment processor was the largest segment in the Financial Technology market by type of service provider and is also expected to be the fastest-growing segment. By considering the technology used in the fintech market, the robotic process automation market is considered to be the fastest-growing segment in the coming days.
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