At USV, we believe that the best products and services can broaden access in unprecedented ways. Nowhere is this opportunity more substantial than in financial services where, despite the trillions of dollars of market cap that make up the sector, the vast majority of Americans remain poorly served.
Why? Current banking products aren’t built to establish financial health or understanding for the vast majority of consumers in our country. Instead, traditional banking is built for the wealthy. The banking model functions in 2 basic ways: by investing wealthy customers’ money and charging fees to those whose accounts live around zero. My colleague Nick outlined this imbalance in a post a number of years ago about why it’s so expensive to be poor in America.
And the state of people’s finances shows its shortcomings. 39% of Americans have unpaid credit card balances and 41% have student loans outstanding. 70% have less than $1,000 in savings. More than ⅔ believe that you need at least $100 to start investing (and nearly ⅓ believe that number is closer to $1,000.) These numbers are getting worse not better–despite our technology savvy, millennials are investing at lower rates than any of the generations before. 76% of millennial women find investing confusing.
But in these troubling stats is huge opportunity. Technology makes it possible to serve the mass base of financial services customers with personalized, tailored, high quality products that can improve financial well being for them and their families and result in massive businesses along the way.
Which is why we’re excited to announce our investment in Stash out of our Opportunity Fund.
Brandon and Ed, the founders of Stash, have made it their mission to fix the inequities of the financial services sector. They combine the customer focus and analytical mindset needed to create both a powerful consumer brand and data driven financial institution targeted at a demographic of users that has largely been ignored. 85% of users on Stash come in as either beginners or without any investing experience and now can open their investment account with as little as $5.
And while investing was the starting point, Stash is on a mission to build the suite–this involves a current product set that includes savings, retirement, and custodian accounts, with much more to come. The products are information rich with both content and personalized coaching so consumers can feel empowered to make decisions and to put their money behind the things they care about while knowing Stash has their back and will guide them through. As they increasingly learn about their customer, Stash becomes more and more helpful.
Along the way, they are building a powerful community. Stash users aren’t just investing and saving, they are talking about the product and spreading the word–the root of a powerful growth flywheel. This creates better acquisition funnels and momentum in scale, but, more importantly, its indicative of a product that’s integrating into the lives of their customers and creating excitement, peace of mind, and trust in a new kind of financial services institution. And when’s the last time someone said that about their bank?
We are excited to welcome Stash to the USV family and work with Brandon, Ed, and the rest of the team.