StashAway Secures $25 Million in Series D Funding

StashAway, a prominent investment application, has successfully secured $25 million in Series D funding. The investment round was spearheaded by Sequoia Capital India, with significant contributions from existing investors Eight Roads Ventures and Square Peg.

Following the completion of necessary regulatory approvals, Abheek Anand, Managing Director at Sequoia Capital India, is slated to join StashAway’s board of directors as a result of this funding round.

Assets Under Management and Market Expansion

While the precise number of users leveraging StashAway’s robo-advisor application remains undisclosed, the company exceeded $1 billion in assets under management (AUM) in January.

Currently, StashAway operates across five key markets: Singapore, Malaysia, the United Arab Emirates, Hong Kong, and is actively preparing for a launch in Thailand.

Financial Details and Strategic Allocation

This Series D funding elevates StashAway’s total paid-up capital to approximately $61.4 million. The newly acquired funds will be strategically allocated towards expanding the company’s product and engineering teams, facilitating continued development of both features and products.

Furthermore, founded in September 2016, StashAway will offer a buyback program for up to $3 million in stock options held by its employees.

According to Co-founder and CEO Michele Ferrario, this initiative provides long-tenured employees with an opportunity to realize value from their vested stock options, while simultaneously enhancing the company’s compensation package for attracting top talent.

Product Offerings and Fee Structure

StashAway’s suite of products caters to retail investors, focusing on wealth accumulation and specific financial objectives such as retirement planning or homeownership.

The company also provides StashAway Simple, a cash account offering a projected annual return of 1.2%, with funds accessible within one to three business days.

Management fees for StashAway’s services range from 0.2% to 0.8% annually.

Target Demographic and User Base

StashAway’s primary target demographic consists of individuals aged 30 to 45, possessing sufficient income for savings and investments, alongside financial commitments like retirement contributions or children’s education funds.

While users under 30 represent a smaller portion of the company’s AUM, they constitute a significant segment of the user base due to the app’s accessibility – it doesn’t impose minimum investment requirements.

Despite its reputation for attracting first-time investors, approximately 20% of StashAway’s AUM originates from high-net-worth individuals.

Addressing the Needs of Affluent Investors

Ferrario explained that the company discovered a need among high-net-worth individuals for more sophisticated investment solutions.

“Individuals with less than $10 million to $15 million in wealth often receive services from private banks that lack the necessary sophistication or personalization. We provide a more advanced investment approach at a reduced cost.”

StashAway Workplace and Financial Wellness

Late last year, StashAway introduced StashAway WorkPlace, a platform enabling employers to offer benefits such as pensions and vesting schedules.

This platform evolved from the Financial Wellness Program, a series of seminars and workshops on financial planning and investing, utilized by approximately 200 companies in Singapore, including Salesforce, Twitter, Netflix, and LinkedIn.

Competitive Landscape

Since the launch of its application in 2017, the robo-advisor market in StashAway’s operating regions has become increasingly competitive.

Competitors such as Syfe also target new investors, while other investment applications in Singapore include Endowus, Kristal.AI, and AutoWealth.

Differentiating Factors: Proprietary Framework and Customer Service

StashAway distinguishes itself through its proprietary asset allocation framework. This framework analyzes asset class performance under varying economic conditions, utilizes leading indicators and economic data patterns to gauge uncertainty, and adjusts expected returns based on an asset’s valuation relative to its economic fair value.

The company asserts that its performance has consistently surpassed benchmarks since its inception in 2017. As of the end of March, its portfolios outperformed comparable-risk benchmarks (represented by the MSCI World Equity Index and FTSE World Government Bond Index), delivering annualized returns ranging from 16.5% (for the highest-risk portfolio) to 4% (for the lowest-risk portfolio).

Furthermore, the app prioritizes customer service, boasting phone call answer times of under eight seconds and an in-app WhatsApp link providing direct access to human service representatives.

The Larger Market Opportunity

Despite the emergence of other investment apps, Ferrario identifies traditional banks as StashAway’s primary competitors.

“Across the five countries we operate in, there’s approximately $5 trillion in personal financial wealth, with Singapore alone accounting for around $1.1 trillion,” he stated.

A substantial portion of this wealth, roughly $400 billion, remains in savings accounts, representing funds that are not actively generating returns for their owners.

Sequoia Capital India’s Perspective

In a press release, Anand commented, “StashAway is experiencing rapid growth by addressing a clear need in the digital wealth management sector, particularly in areas where competitors fall short: a user-friendly platform, strong client relationships, and a highly sophisticated investment framework. StashAway has cultivated trust with its client base by successfully navigating market volatility while delivering robust returns.”