Robo-advisor StashAway gets $25M Series D led by Sequoia Capital India

Fundings and Exits

Investment app StashAway has raised a $25 million Series D led by Sequoia Capital India, with participation from returning investors Eight Roads Ventures and Square Peg. After regulatory approvals for the funding are completed, Sequoia Capital India managing director Abheek Anand will join StashAway’s board of directors as part of the round.

StashAway does not disclose how many investors use its robo-advisor app, but it surpassed $1 billion assets under management in January. It currently has operations in in five markets: Singapore, Malayasia, the United Arab Emirates and Hong Kong, and is preparing to launch in Thailand.

Its Series D brings StashAway’s total paid-up capital to about $61.4 million. The new funding will be used on expanding StashAway’s product and engineering teams to continue feature and product development. Founded in September 2016, the company will also offer to buy back up to $3 million in stock options from its employees. Co-founder and chief executive officer Michele Ferrario told TechCrunch that many of StashAway’s employees have been with the company since the start, so this gives its team members a chance to cash out stock options that have vested while creating a more compelling compensation package for recruiting talent.

StashAway’s products include services for retail investors that focus on wealth-building or specific goals like retirement or buying a house and StashAway Simple, a cash account that can earn a projected rate of 1.2% per annum and allows funds be withdrawn within one to three business days. Its management fees are between 0.2% to 0.8% a year.

Ferrario said that StashAway’s core market is people aged 30 to 45, who are earning enough money to save or invest, but also have obligations like saving for retirement or their childrens’ education. People under 30 account for a smaller portion of StashAway’s assets under management, but are still a significant part of its user base because the app doesn’t require minimum investments, making it accessible to people who recently graduated or are just starting their careers. While StashAway has built an reputation for attracting first-time investors, about 20% of its assets under management come from high-net-worth individuals.

“This is something we didn’t think would happen at the beginning, but then we realized that some of the problems we’re solving are also significant problems for high-net-worth individuals as well,” said Ferrario. “If you have less than $10 million to $15 million in wealth, the services you receive from private banks are not particularly sophisticated or personalized. So we offer a more sophisticated investment at a lower cost.”

At the end of last year, the company launched StashAway WorkPlace, a platform for employers to provide benefits like pensions and vesting schedules. StashAway WorkPlace grew out of the Financial Wellness Program, a set of seminars and workshops on financial planning and investing that has been used in Singapore by about 200 companies, including Salesforce, Twitter, Netflix and LinkedIn.

Since StashAway launched its app in 2017, more robo-advisors have emerged in the same markets it serves. For example, Syfe also caters to new investors. Other investment apps in Singapore include Endowus, Kristal.AI and AutoWealth.

One of the main ways StashAway differentiates is its proprietary asset allocation framework, which looks at how each asset class performs under specific economic conditions, measures uncertainty with leading indicators and patterns in economic data, and adjustments to expected returns based on an asset’s valuation relative to its economic fair value. The company says it has outperformed benchmarks since launching in 2017. At the end of March, its portfolios outperformed their same-risk benchmarks (proxied by MSCI World Equity Index and FTSE World Government Bond Index), with annualized returns ranging from 16.5% (for the highest-risk portfolio) to 4% (the lowest-risk portfolio).

Ferrario said the app also emphasizes customer service, with phone calls typically answered in less than eight seconds, and an in-app WhatsApp link that connects users to a human service representative instead of sending them through a chatbot first.

But StashAway’s main competitor is still traditional banks instead of other investment apps. “In the five countries we are in, there is approximately $5 trillion of personal financial wealth. In Singapore alone, it is around $1.1 trillion,” Ferrario said. A large portion of that cash, or about $400 billion, sits in savings accounts. “That’s money that’s not working for whoever owns it,” he added.

In a press statement, Anand said, “StashAway is growing rapidly as it fulfills an obvious gap in the digital wealth management space, especially in areas where its competitors may be lacking: an easy-to-use platform, robust client relationships and a very sophisticated investing framework. StashAway has built trust with its client base by navigating them through market volatility while providing strong returns.”

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