Stash Business Model

Stash is a FinTech website that provides access to various financial tools and tailored investment advice and life insurance. 

Stash Business Model is based on memberships, cashback, payment for order flows, and interest on membership accounts.

Stash is a personal finance application that makes investing easy and accessible to the average person. The firm offers three investing plans, a bank account (via a partner), and rewards debit cards to their customers.

Stash has something for everyone, whether you want to own a piece of your favorite company, invest in brands that support a good cause, or try to increase your money through the stock market.

Stash can be downloaded using iOS and Android devices and includes many financial tools and resources to help you invest more money and help you develop smarter spending habits.

What is Stash?

Stash is a FinTech company based in the United States that offers financial products to retail investors. You can invest in various equities or index funds, receive personal investment advice, buy life insurance, and get a debit card.

Stash Business Model

Stash earns money through subscription fees, cashback rewards, order flow compensation, and interest on funds.

Stash was founded in 2015 and is based in New York. This company has evolved into one of the most popular financial applications for individuals. Stash has raised over $300 million and is valued at over $800 million.

How Does Stash Works?

The Stash application provides a wide array of investment and savings options to users.

Stash is a very versatile application. The company offers a user-friendly investment platform and a banking (checking) account2, a VISA debit card2, and the opportunity to open a retirement account3 at certain subscription levels.

The next few minutes will be spent extending each of these points. However, it is vital to remember that Stash has an extremely clean, user-friendly layout and a simple vocabulary.

Stash provides the following services:

  • An investment process that invests in various (fractional) stocks and exchange-traded funds without regard for predefined rules or regulations
  • Assistance with personal finances
  • You get cashback (in the form of stock) when you use a so-called Stock-Back card at participating retailers.
  • An Individual Retirement Account or Roth IRA
  • Life insurance (administered by Avibra)
  • Custodial account of a child

… Among many others. Subscriptions to Stash’s various service tiers allow you to access these goods and services. You can choose between Stash Beginner, Stash Growth, and Stash+.

The Stash signup process includes numerous questions for determining a user’s risk tolerance and financial goals. They can thus provide customized advice on topics such as investing and budgeting.

Stash Business Model

You can then choose from hundreds of stocks and dozens of exchange-traded funds (ETFs), such as Match the Market and Foreign Heavyweights.

Stash supports Android and iOS mobile, tablet, and smartphone devices.

How Does Stash Make Money?

Stash earns money from subscriptions, referral fees from its cashback program, payment for order flow, and returns on monies held by cardholders.

Stash generates revenue by offering subscription-based investment, banking, and retirement services. Additionally, the firm earns money from referral fees and any returns on investments made by Stash account holders.

Let’s take a closer look at each of these revenue streams in further detail below.

Subscription Fees

Three subscription plans are available with Stash, as mentioned previously. There are three versions of Stash: Beginner, Growth, and Stash+.

Tiers offer various benefits, such as individualized investment advice, custodial accounts, and exclusive cashback rewards.

Acorns, the firm’s closest competitor based on user target, offers similar plans. 

The Robo advisors, like Betterment or Wealthfront, which cater to high-income clients, require management fees rather than subscriptions.

They can cost between 0.25 percent and 0.40 percent, depending on the amount invested. Users with the Beginner plan (= $1) would be required to invest between $250 and $400 (0.25 percent) per month to get the same interest rate.

Order Flow Payment

Payment for order flow is another revenue stream, although it is rather contentious. It is a strategy used by virtually every modern online brokerage and represents a substantial part of their income.

Stash’s platform routes stock orders to a market maker, compensating the brokerage (in this case, Stash) for generating deal flow.

The bids made by these market makers are often more competitive, thus allowing them to compete against it (like NASDAQ). Stash does not disclose the market makers with whom it collaborates.

Market makers are fundamentally engaged in arbitrage. Trades are conducted algorithmically (without human intervention), enabling them to simultaneously execute hundreds upon thousands of trades. 

The market maker then attempts to profit from what is known as the bid-ask spread (or turn), which is the difference between the quoted rates for an instant sale (bid) and an instantaneous buy (ask) (ask).

Stash Business Model

Market makers have frequently been condemned by both consumer advocacy groups and banking regulators in the past. A process, at first glance, is often opaque (since this particular process is run automatically).

A second factor that contributes strongly to market volatility is the speed at which trades are conducted. The price of execution may not be the best for retail investors.

The trading app Robinhood settled with the SEC in December 2020 for $65 million for misleading consumers (without acknowledging any wrongdoing). The SEC asserted that the order flow payments were made at a lower rate than other brokerage firms.


Customers who make purchases with the Stock-Back card at Stash receive cashback incentives. A fraction of your debit card purchase is automatically purchased at your partner retailer (such as Costco or Netflix) when you pay with your debit card.

A user can earn up to 5% in stock rewards. (the average is 0.125 percent). Stash invests $5 of every $100 spent at Amazon (another partner) in Amazon shares.

When a user uses the Stock-Back card to purchase, Stash will earn money, just like any other reward program. Users will then be given a portion of the reward to promote the partner’s store to them.

Interest On Cash

Users can borrow money from Stash from other entities, such as other banks, like any other bank.

They are then paid interest by these institutions (also known as net interest margin). Statistics from Statista show that all US banks had a net interest margin of 3.35 percent in 2019.

What is the Funding & Valuation of Stash?

Crunchbase reports that Stash has raised $247.4 million over ten rounds in venture capital funding.

LendingTree, Breyer Capital, Union Square Ventures, and T. Rowe Invest are notable investors in Stash.

A valuation for Stash was last announced during the company’s Series F financing (announced in April 2020). Stash was valued at $800 million at the time – a figure it almost certainly exceeded (it raised another round in January 2021).

What is the Revenue of Stash?

Stash is not obliged to disclose its sales or profit figures to the public. The corporation is almost certainly going to continue to lose money as it tries to expand.

Pros of Stash:

  • You can ease some of the worries associated with investing with Stash if you are new to it.
  • Stash offers a low-cost plan: $1 per month will buy you shares and exchange-traded funds.
  • Stash does not require a minimum investment: you can start investing with as little as one dollar.
  • When you have Growth, Stash +, or Stash Portfolio, you get access to Stash Smart Portfolio, a Robo-advisor.

Cons of Stash:

  • The majority of the functions included in Stash’s $1 per month plan can be found elsewhere for free: It is not a free resource.
  • Stash Plus is overpriced by $9 per month: I don’t understand why I should pay that much.
  • Stash’s debit card offers Stock-Back, instead of cashback. The rewards, however, are not comparable to those of credit cards offering cashback.
  • Investing in exchange-traded funds offered by Stash may result in higher expenses than you expect. Do your homework before investing in these ETFs.
  • It is impossible to understand the user interface: The software appears to have no linear progress, making navigation difficult.

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Success Story of Stash

Stash was launched in 2015 in New York by Brandon Krieg (CEO), Ed Robinson, and David Ronick.

All three founders of Stash had extensive experience in entrepreneurship and finance before founding the company.

An electronic trading company called EdgeTrade hired a young Krieg as its second employee in 1998. 

He aided the business’s growth throughout the next decade, culminating in a successful exit. EdgeTrade was acquired by Knight Capital for a total of $59.5 million in 2007.

Krieg remained with Knight for the next five years, assisting with the integration of EdgeTrade. 

A few years later, he joined Macquarie, where he helped set up their computerized trading desk.

He met Robinson at Macquarie, where he began his career as a trader in 2005. 

Robinson lived for a time in Sydney and London until he relocated to New York in 2013, where he met (and made friends with) Krieg.

They decided to form a partnership and start their firm after two years of working together. 

David Ronick, who had years of experience starting and exiting his firms, joined them as the third co-founder.

The crew spent the first few months simply talking to strangers on the street, inquiring about money management, investing, and saving. 

The prevailing impression was that the average person was interested in investing their money but was intimidated by the perceived complexity.

The trio began developing an iOS application in February 2015 (Android was released in early 2016). Stash attracted more than 50,000 users before its debut.

The team skillfully generated buzz by doing interviews with numerous business and finance magazines, resulting in early exposure.

The team raised $1.5 million in angel funding from friends, family, personal savings, and a few investors.

Ronick was the CEO of Stash, but he left the company within a year (and moved into an advisory role). 

Today, he manages Minded, a stress-relief medicine delivery service.

Stash still enjoys high interest despite the setback. The business raised $37.3 million in three rounds of funding in 2016. 

There were then more than 300,000 subscribers (and 10,000 more signed up every week).

The startup’s growth was fueled by a few major strategic changes. To begin, Stash was fully aware of their customer demography. 

These were frequently millennials (on average, 29 years old) with a yearly income of around $50,000.

Stash enabled consumers to invest as little as $5 (through fractional shares), in contrast to the hundreds or thousands required by established internet brokers such as E*Trade or Charles Schwab.

Stash also prioritized teaching its consumers (through videos, an onboarding guide, and individualized recommendations) and personalizing their investment products (in this case, ETFs). 

For example, ETFs could be named The Techie (for a portfolio focusing on technology) or Clean & Green (stocks focused on renewable energy).

Stash added new features aimed at meeting the needs of its customers to its product offering. 

One such tool is the firm’s savings feature, which automatically sets aside money each month and invests it in equities or exchange-traded funds. Even weight loss regimens served as motivation for the team.

This in-depth information of their clients enabled them to continue onboarding new customers while also raising money.

Stash (along with other investment applications such as Acorns or Robinhood) developed its business due to the coronavirus outbreak massively. 

Customers began investing an excessive amount of money from their government checks inequities, which supported the firm’s expansion.

Today, Stash manages close to $2 billion in assets (AUM). The firm’s platform today has over 5 million registered users in the United States.

Additionally, the company employs approximately 300 workers across three offices in the United States and the United Kingdom.

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Is Stash Legit?

Stash is a for-profit business funded by subscription fees. Beginner plans cost $1 per month, growth plans cost $3 per month, and Stash+ plans cost $9 per month. 

A further source of income for Stash Investments is the accounts of its customers at Apex. Additional revenue is generated by charging client fees for actions taken in their accounts.

Key Takeaways from Stash Business Model

Stash is a financial technology startup focused on increasing young investors’ financial literacy.

Stash generates most of its revenue through a subscription-based model that includes three tiers of subscriptions. There are different levels of access to tailored counsel and additional features offered by each. 

The company will switch to a flat fee structure in 2020 rather than charging a percentage of cash invested.

Furthermore, Stash profits from the somewhat contentious order flow payment, in which a financial institution acts as a broker for the customer. Stash rewards program members are also charged a commission on qualified transactions.

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