Stash, a fintech app focused on investing, recently secured $40 million through a convertible note, a form of short-term loan that can be converted into equity later. T. Rowe Price, an early and existing supporter of the company, led this funding round.

CEO Liza Landsman explained that employing convertible notes allows Stash to extend its path to profitability without needing to establish a valuation, providing adaptability in the current market climate.

Stash's objective is to provide an affordable investment platform for individuals with moderate incomes. The company is looking to go public in the near future and, to support this endeavor, they've appointed Amy Butte, former CFO of the New York Stock Exchange, as their inaugural independent audit chair.

Stash consciously decided against seeking additional venture capital due to market instability and their proximity to profitability. They anticipate achieving profitability by the close of 2024. In 2021, Stash raised $125 million at a valuation of $1.4 billion. Including this recent round, the company has now raised about $550 million in equity and debt since its establishment in 2015.

Although Stash fell short of its projected annual revenue of over $125 million in 2022, they did see a rise in margins. In 2022, their gross margin was slightly above 50%, and they forecasted an almost 75% gross margin for 2023. Stash presently boasts 2 million active subscribers who have collectively saved nearly $3 billion over time.

The company has also concentrated on cost-cutting measures, including workforce reductions. Starting 2022 with about 500 employees, they now have roughly 320, with plans to add around 15 more employees by year-end. Stash made strategic hires, including Chien-Liang Chou as its chief technology officer.

Stash competes in the same sphere as Acorns and Robinhood, with Acorns being a more direct competitor. Stash targets individuals with modest incomes with plans beginning at $3 per month. They emphasize fractional share purchases, diversified portfolios, and education on investing.

Stash diverges from neobanks, providing banking services as a facilitator for investing but not positioning itself as a neobank. The majority of their revenue (81%) comes from subscriptions, distinguishing them from the more transactional model of Robinhood.

Amy Butte, the new independent audit chair, and Rebecca Kaden, managing partner at Union Square Ventures, both highlight Stash's distinctive position in the fintech landscape. Butte notes that Stash is a fintech with longevity and innovation potential, preparing for potential entry into public markets. Kaden sees Stash as distinctive for combining investing tools with advice and proprietary technology, making financial guidance accessible at scale.