Stash raises $3M seed to hook millennial investors

Ronny Kerr · February 9, 2016 · Short URL:

Available today for iPhone, Stash seeks to one up incumbents by focusing specifically on millennials

If there are two things everyone assumes about us millennials, it’s that we’re broke and we're, like, really really passionate about our beliefs.

Seeking to capitalize on both of those notions is Stash, a millennials-focused investment app that just announced it has secured a $3 million seed round led by Goodwater Capital with participation from Valar Ventures, Entree Capital, and previous investors.

Stash’s biggest selling point is that individuals can start investing with as little as $5, which the company makes possible by splitting single shares into fractional shares. Since no one’s going to make much from a five-buck investment, Stash sees this offering as a way to get your average, inexperienced millennial knowledgeable (and perhaps hooked) on investing so that they continue to use the platform.

"We’re fans of starting small, and learning as you go," said David Ronick, co-founder and CEO of Stash, in a note to VatorNews. "It’s a great way to get the hang of investing, without fear of making a big mistake. Additionally, with Stash, our users can buy fractional shares of a fund, which allows them to pick multiple investments and stay diversified to reduce long-term risk." 

Even after a free three-month trial, the company only charges a $1 monthly subscription fee, given further credence to this model. Only once the investor's account reaches $5000 does Stash start taking a 0.25% yearly commission on the account.

“By lowering the minimum level of investment, enabling millennials to invest in broad themes that they care about, and guiding them along the path toward building smart lifelong investment habits, Stash has the potential to empower an entire generation to reach their financial goals,” said Chi-Hua Chien, Co-Founder and Managing Partner of Goodwater Capital in the press release for the announcement.

Continuing with the millennial-targeting, Stash offers its clients a couple dozen investment options directly tied to "interests, beliefs and goals," and the investments even come with catchy names so the millennial clients’ eyes don’t glaze over.

If you want to invest in Berkshire Hathaway (NASDAQ: BRK.B), for example, you choose "Roll with Buffett." Similarly, investments for the Schwab US Dividend Equity ETF (NASDAQ: SCHD) and the iShares U.S. Aerospace & Defense ETF (NASDAQ: ITA) are titled "Delicious Dividends" and "Defending America," respectively. It makes investing as fun as ordering from a fast food menu or playing a video game.

Stash also offers advice for building your portfolio and guidance when it comes to filing taxes.

Of course, Stash isn’t the first company to aim at getting millennials into investing. A quick Google search brings up plenty of listicles offering easy-to-use, low-risk services for anyone new to the investing game. Betterment lets you make small, monthly investments, Acorns rounds up your credit and debit card purchases to set the money aside for investing, and Kapitall even gamifiies the whole process of becoming an investor.

Stash says it will use its seed funding to continue developing the app while adding product features and launching an Android app.

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