Investing app Stash raises $125 million as it looks to add new customers — just not day traders
Stash founders: Ed Robinson (L) and Brandon War
Stock trading app Stash plans to announce a $ 125 million venture investment to drive customer growth. But it’s not about attracting the trader who could bet on GameStop.
The New York-based company will announce a Series G funding round Wednesday, led by Eldridge with the participation of T. Rowe Price and others. The cash injection puts Stash’s valuation at $ 1.4 billion, according to people familiar with the matter.
“We built a bad day trading system on purpose,” Stash founder and CEO Brandon Krieg told CNBC. “Our brand and message, as well as our onboarding, are not attractive to someone who comes into daily trading.”
Krieg said while individual stocks are allowed to be traded on Stash, he does not allow margin or option trades to be traded. The app also does not provide real-time market data.
The announcement follows a hectic week for Stash and most trading apps and brokerage firms. Robinhood and Interactive Brokers restricted trading in certain volatile stocks like GameStop and AMC as they went viral on social media.
Stash said it temporarily ceased trading with AMC and GameStop after its clearing firm Apex temporarily stopped accepting buy orders. These limits have been lifted at Stash and still vary at other brokerage firms.
The stock market ushered in a flood of new investors last year. According to JMP Securities, the industry added a record 10 million accounts, 6 million of which were from Robinhood alone. Stash said it doubled its clientele to a total of 5 million accounts last year and increased assets under management to $ 2.5 billion.
Stash makes money with a subscription fee that is billed to its customers. The CEO said the start-up would not benefit from selling client businesses to high-frequency trading companies. Robinhood and other brokerage firms rely on this source of income behind the scenes to provide free trading.
Stash’s interface offers more “hand-holding” to new investors than some of its competitors, Krieg said. Comparing it to a private bank for individual traders, he said he was looking to the weight loss industry.
“If you want to lose 30 pounds, you can’t lose it in a day – that’s how it works in financial services,” said Krieg. “We have a simple investment philosophy: buy and hold over the long term and diversify.”