What according to you is the primary goal of every business? You guessed it right. To make money. But even making big money requires a big amount of money to be initially injected in the startup business venture. The trend of entrepreneurship coupled with the huge investments has given rise to micro investing.
What is micro investing?
With the rise of entrepreneurship more Gen Y-ers are figuring out that it’s a good idea to start investing and just like they do with so many other things, they are not letting them be constrained by the traditional options available to them. Or even newer trends like making investments in startups. Smaller investing options that also include the new, electronic investing options like penny stocks etc. are all clubbed under the micro investing umbrella. Through micro investing, millennials are now learning to get into the stock market.
But the question remains that how the generation with the largest amount of debt on them is able to invest and that too, this much? The answer involves approaching investment in a similar way you build good habits. Start small building your way up. This is the essence of micro investing. Replacing large start-up capital with an, ‘as you go’ approach.
Why Micro Investing is important?
Micro investing allows the aspiring investors who do not have big starting capital to bypass the obstacles that usually keep them off the game field. Micro investing requires minimum investing levels, trading costs, and market research. Lots of money is not really required.
Investing has always had a high buy-in value, which would make you believe could save the generation with whatever they have. But, thanks to mobile application development in the USA, some apps are changing that and are opening doors to millennials for creating their own investment portfolios.
The Impeccable rise of Stash App
Micro investing app Stash has raised an additional $40 million in C series funding, the company announced a few days back. Following a rapid growth in terms of new signups, 86% of whom were first-time investors. The startup app allows people to start with as little as $5, and keep building a portfolio till they are in a position to contribute more, over time.
Stash is competing in a market that is now almost saturated with mobile apps that suggest less traditional ways of investment to investors, ranging from robot-advisors like Betterment, stock trading apps like Robinhood and rival micro investing apps like PayPal-backed Acorn.
As with Stash, the users are not required to have a big pool of money set aside to be used as an investment. Instead, you can set up an account in just a couple of minutes by connecting Stash’s app to your bank account. You can then access over 35 different investment options and receive personalized guidance to create your first portfolio.
Of course, because investments of small change will only lead to small results, the larger goal here is to get users comfortable with investing, so they’ll begin to automate the process by regularly transferring larger sums from their bank account, through the app’s “Auto-Stash” feature.
Why Stash appeals the young users?
Like many others in this space, Stash aims to appeal to younger users and first-time investors, who are afraid of investing and uncomfortable using traditional tools. The company also notes that other people previously locked out of the market – like freelancers, military personnel, and teachers – are now using its tool to not only invest, but learn financial strategies.
This plan seems to be working. Stash says it’s now servicing over 850,000 users accounts, the majority having been created by a group of people who had never before invested their money. In 2017, the company said it added over half a million new investors to its platform, with over 25,000 new users joining every week.
Users can also customize their investments to their own beliefs and interests, Stash says, as it teaches you about the different sectors in an accessible, jargon-free way. Its financial education platform is today being accessed by over 1.5 million content subscribers, the company adds. Stash in December had raised a $25 million Series B round, so this additional $40 million brings the startup’s total raise to date to $78 million – all raised under two years’ time. The new round was led by Coatue Management, an investor in Snap and China’s Didi Chuxing.
“Stash is disrupting the financial services industry by removing barriers and making investing more approachable and accessible to the 100 million-plus Americans on the sidelines,” said Coatue’s Founder and Portfolio Manager Philippe Laffont, in a statement. “its rapid growth in a short period of time shows that Stash has found a way to transform how Americans manage their money and gain financial independence,” he added.
Existing investors Breyer Capital, Goodwater Capital, and Valar Ventures also joined the Series C round. The start-up is now valued at $240 million, according to Business Insider. Existing investors Breyer Capital, Goodwater Capital, and Valar Ventures also joined the Series C round. The start-up is now valued at $240 million, according to Business Insider.
Company with a vision
The company says it plans to use its new funding for further investment in its own technology and data analytics, which will allow it to offer more personalization, educational tools, and other new products. One such product in the works, Stash Retire, will be launched on mobile this summer.