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The US-based fintech — which offers one-stop finance management through its app with integrated banking, investing, and advisory financial services — has raised a $112 million Series F funding round, led by online lending platform LendingTree and including participation from returning investors Breyer Capital and Union Square Ventures, per TechCrunch.
Stash has indicated that the fresh funds will go toward customer acquisition and raising brand awareness. Adding LendingTree as a strategic investor also opens up the possibility of adding new lending products to the fintech’s already broad suite.
Stash was able to secure funding despite a fall in fintech funding, as we’re seeing a trend of investors betting on established fintechs amid the economic slowdown. Overall, fintech deals are down in 2020, and March was the lowest point in three years. But Stash, which launched in 2015, and other established, well-performing players such as Robinhood have still been able to raise large funding rounds. In turbulent times, investors are more likely to invest in established companies, rather than taking a chance on a brand new company.
Stash could also be benefiting from investors’ tendency amid economic uncertainty to bet on companies enjoying strong growth that they are already invested in, to drive further growth and see a return on their investment. This likely helped Stash secure substantial funding from returning investors such as Breyer Capital and Union Square Ventures, among others, in the latest funding round.
We think Stash will continue on its growth path and fare well long term thanks to its diversified product suite and sustainable business model.
Stash continues to attract users during the pandemic due to its diversified offerings. Stash debuted as a microinvesting app, but has since transitioned into providing a wide range of financial service offerings. The fintech was enjoying strong growth with its customer base before the coronavirus pandemic hit, and it’s only accelerated since then: In March, Stash saw customer deposits surge 50% and account openings increase 35% compared with February.
We think the fintech’s diversified offerings have fueled this surge in consumer interest, as both savings and investing products have been clear winners of the coronavirus pandemic. Of note, Stash also rolled out a tool to help users calculate how much their stimulus payment will be, along with regular coronavirus updates — these efforts to help customers in their time of need likely also created goodwill toward the fintech.
Stash should fare well in the long term as its business model and large customer base are positioned to support sustainable growth. The fintech is in an enviable position with its 4.5 million users and $1 billion in assets under management, as customer acquisition costs are often a hurdle to the growth of fintechs.
What’s more, Stash does not offer any free services — monthly subscription fees range from $1 to $9 — so it already monetizes users and is likely on a path to sustainable growth, which is all the more important during the economic uncertainty caused by the coronavirus pandemic as investors are seemingly turning away from fintechs that don’t appear to have the potential for profitability in the near future.
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