Stash raises $40M through a convertible note to skip a priced round and head toward an IPO

A New York investing app for lower and middle income consumers, with plans from $3 a month, fractional shares from 1 cent and a debit card that rewards purchases with stock.

That convertible debt gives Stash the runway to reach profitability without setting a valuation, leaving it public-market ready on its own timing.

$40M convertible note led by T. Rowe Price with Union Square Ventures and Goodwater Capital; about $550M raised in equity and debt since 2015.

Stash's last venture round was $125M at a $1.4B valuation in 2021. CEO Liza Landsman, who joined in February 2023 from NEA, said the company chose to constrain growth and focus on profitability, cutting staff in more than one layoff and ending 2022 a little under its $125M revenue target.

After a board meeting in summer 2023, early backer T. Rowe Price offered to lead incremental capital. Stash chose a convertible note because, Landsman said, it avoids a valuation in a volatile market and, with profitability close, it did not need a priced round. It also named former NYSE CFO Amy Butte as its first independent audit chair to prepare for public markets.

Market volatility made a priced round unattractive, and Stash says its nearness to profitability meant it did not have to do one.

T. Rowe Price, an early backer, approached the company after a board meeting offering to lead incremental capital.

A convertible note avoids fixing any valuation, which matters after a $1.4B valuation set in 2021.

In a market where investors hold the upper hand, a convertible note can buy runway without fixing a valuation, but it signals that a priced round was off the table.

As of 2023-10-13 Stash had $40M of new convertible debt, about 320 employees, 2 million subscribers and a stated aim of profitability by end of 2024 and a public listing in two to three years; the revenue and margin figures are the CEO's own.