Stash Banks $40 Million, Eyes IPO

Stash Banks $40 Million, Eyes IPO

Investing app Stash has secured $40 million via a convertible note, spearheaded by its early and standing supporter, T. Rowe Price. The manoeuvre comes in the wake of its previous capital injection of $125 million in 2021, valuing the company at $1.4 billion.

Transaction Highlights:

  • Deal Value: Approximately $40 million.
  • Valuation: Stash's current valuation stands at $1.4 billion based on its last funding round.
  • Investor: T. Rowe Price, an existing early backer.
  • Recipient: Stash, a fintech company targeting lower and middle-income consumers.

Stash in Focus:

  • Profitability Path: According to CEO Liza Landsman, the funding provides Stash with the "runway to get to profitability".
  • Public Listing Aspirations: Stash has its sights set on a public listing in the near future, also announcing Amy Butte, ex-CFO of the NYSE, as its first independent audit chair.
  • Financial Milestones: While falling slightly short of its $125 million annual revenue target, Stash aims to end 2023 with a near 75% gross margin.

CEO Liza Landsman sees the funding as a double win for Stash. She emphasises that the convertible note—essentially a short-term loan that may convert to equity—gives the company a financial cushion without a pre-determined valuation. Landsman says the deal puts Stash on the right track for a public listing.

Strategic Decisions:

Stash's decision to forgo another venture capital round came down to volatile market conditions. Landsman explained that thanks to the firm's closeness to profitability, it had the luxury of avoiding a priced round.

Industry Context:

T. Rowe Price wasn't the only firm to get in on the action; other backers included Union Square Ventures and Goodwater Capital. Stash faces stiff competition from companies like Acorns and Robinhood, but it aims to distinguish itself with a focus on lower and middle-income consumers and a subscription-based revenue model.

What Lies Ahead:

Stash's growth trajectory is supported by its two million active subscribers who have saved close to $3 billion collectively. The fintech firm also plans to add around 15 new employees by year's end, recently appointing Chien-Liang Chou from Dave and Salesforce as its CTO.

Landsman adds, "We're really focused on bringing in capital for future growth. We're fortunate to have strong support from our existing investors, like T. Rowe Price, to lead this funding."

Stash is in a high-stakes race with rivals like Acorns, but its strategic fundraising and focus on financial stability suggest it's prepared for the long haul. The company has made significant efforts to cut costs, including more than one round of layoffs, and has concentrated on striking the right balance between growth and profitability—setting the stage for its next ambitious phase.

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