Share platform ups Stake $53m
Firm’s focus on staff hire, crypto, product development
Australasian share trading platform Stake has shrugged off a slide in global markets to raise A$50 million ($53m). The Series A extension followed a A$40m raise last year, taking the total round to A$90m.
Founder and chief executive Matt Leibowitz told the Herald the funds would be used for product development, hiring more staff (Stake has 135 today) and an expansion into cryptocurrency.
Leibowitz said Stake would “look beyond Bitcoin and Ethereum” to offer the opportunity to invest in around 100 cryptocurrencies. There is one traditional element, however. Users will have to top up their Stake account in United States, Australian or New Zealand dollars to fund their crypto forays.
Like rivals Sharesies and Hatch, Stake offers direct access to US markets (as well as the ASX and NZX) and allows investors to buy fractions of shares so small amounts can be invested each week.
Stake — which now boasts 50,000 members in New Zealand and 200,000 active traders overall — has, like its peers, expanded quickly during the lockdown boom in day trading. It now administers investments worth around A$2 billion.
The firm’s A$90m raise follows a $50m raise by Sharesies (which has around 450,000 users), confirming that fractional ownership platforms remain in private equity investors’ good books (while Stake began in Australia then expanded into NZ — and will use some of its new capital to expand further here, Sharesies started on this side of the Ditch and is now expanding into Australia).
Raising A$90m gives Stake “considerable” breathing space, Leibowitz says. It could be years until his firm needs to return to the well.
Still, does the recent market meltdown keep the CEO up at night?
Leibowitz says Stake’s investors tend to be more experienced. Some 75 per cent already owned shares before joining.
“They just wanted a cheaper way to access US stocks”. Stake enabled tens of thousands of Kiwis to pile into Rocket Lab and Allbirds’ respective Nasdaq listings.
He adds that some have made money during the recent market slide by using Stake’s platform to short stocks.
There have also been a couple of bright spots, including lithium stocks in Australia amid the electric vehicle boom and Twitter, which was Stake’s most-traded stock in NZ over the past week. And while virtual can be volatile, Leibowitz says around a third of Stake users already trade crypto.
The value of the average Stake portfolio is modest (around $10,000 in Australia and about $11,000 in NZ), reflecting the broad reach of the fractional ownership model, which can see people chipping in sums as low as $20 per week.
It also skews young. Leibowitz says the average Stake investor is 32.5 years old in Australia and 33 here. Leibowitz says these “nextgeneration” punters want access to new asset classes.
“Crypto is taking the world by storm and has established itself as a legitimate asset class. Investors are demanding it and brokers who are dragging their feet will fall behind,” he says. While he concedes crypto can be risky, Leibowitz says Stake will offer a curated selection of 100 digital currencies. And he adds that risk is nothing new, citing speculative mining stocks in the more traditional investment arena of equities.
Stake — founded in 2017 — is on track for around $20m revenue this year, its CEO says. The privately held company doesn’t release detailed financials. But Leibowitz says despite the down market, revenue will be ahead of 2021.
Revenue is generated from a clip of the ticket on Australian trades plus a 1 per cent foreign exchange fee on Stake’s commission-free US trades (US and NZ trades are noncommission).
Stake is still making a loss, and will do for some time as it prioritises growth, Leibowitz says. His immediate issue is recruiting new staff. “It’s expensive to hire talent in Australia and New Zealand. It’s a candidate’s market.”
The Series A round was led by New York-based private equity firm Tiger Global and DST Global.