The first 4 years building StashAway - the journey and the learnings

Over the last 4.5 years, I have frequently been asked to speak about the story of StashAway and about my learnings, specifically by many new or aspiring entrepreneurs. We are still early in the journey, and have only started to deliver on our mission to empower people to build wealth in the long term. However, as today we announced that StashAway manages more than USD 1 Billion in Clients’ assets, I thought it’s a good day to write about the path so far (and to write my first ever LinkedIn Article!).

The learnings are summarized at the end of the article.

The Journey

This article goes into quite a lot of details on our journey so far. To make this easier to digest, I have divided the article into the following sections:

• The idea
• The very start: meeting Nino and Freddy
• Launch
• Delivering what we promised
• Fundraising
• Going international
• Growing the team
• Looking ahead

The Idea

I started thinking about building a digital wealth manager in April 2016, when I was the (happy) Group CEO of fashion e-commerce ZALORA, and ZALORA’s largest shareholder, Kinnevik, led the Series D round in Betterment, a NY-based digital wealth manager. I read the 2 slides describing what Betterment did and thought “fully digital, diversified, low cost: this is how I want to invest my savings!!!!”. The 4 exclamation marks are a result of years of painful conversations with my Relationship Managers at 2 different banks, as they were trying to sell me incredibly expensive Unit Trusts, ILPs and Structured Notes, that for the most part were not a fit for my needs. I googled “robo-advisors Singapore” and… nothing meaningful came up: there was no “robo-advisor” in Singapore. Was it the right time to stop selling t-shirts and start helping people build their retirement funds? After all, I did spend the first half of my career in finance (and my fashion sense is nothing to be proud of…).

The very start: meeting Nino and Freddy

Fast forward a couple of months, for a number of reasons on the 21st of June 2016 I announced that I was going to leave ZALORA. The day after the announcement, I started to reach out to potential tech co-founders; I reached out to Nino, whom I was introduced to a few months earlier, but had not yet met. We grabbed a coffee on the 19th of July, and then on the 20th, and then on the 21st and the 22nd. By the following week, we realized that we got along very well, that we had very complementary skill sets and that we both believed it would be amazing to help people manage their finances better. We then set off to look for an investment expert to join the team, and after speaking to 30+ Managing Directors at various banks, I was introduced to Freddy. We met at Starbucks at The Cathay on 3rd of August, and our 1-hour meeting turned into a 3.5 hours problem solving discussion on how to build the investment engine behind a digital wealth manager. We disagreed and argued with each other, and slowly found common ground. It was cool. Very cool.

By the end of August 2016, Nino, Freddy, and I had decided that we were going to build a digital wealth manager to help people do the right things with their savings. On September 9th, we incorporated the company: we were gonna do this officially!

Launch

StashAway operates in a highly regulated industry, and therefore we could not onboard any client until we received our license from the Monetary Authority of Singapore (“MAS”). This meant that in early 2017 we built the product running iterations on mockups, inviting potential clients to our office, rather than putting out an MVP and asking for feedback publicly. It was a cumbersome and slow process, but it led us to launch a product in June 2017 that was quite developed, very different from a classic “first public version”. 

Our tech and product team delivered a masterpiece within the first year as we had to shoot for a moving target: we did not know when MAS would grant our license, but the goal was to launch immediately after receiving it. The license was eventually granted on the 31st May 2017 and we scrambled to launch an employee-only version on the 15th of June, just 2 weeks later. Amazing, yes. We went live to the public on 18th July 2017, 364 days after my first coffee with Nino!

Delivering what we promised

One of the key ingredients of StashAway’s success so far is that we consistently delivered on our promise. We promised “investing that makes sense”, and “the investment experience we would want for ourselves”. 

In these first 3.5 years since launch, our core portfolios have realized annualized returns ranging from 5.3% p.a. (lowest risk portfolio (=100% bond risk)) to 17.1% p.a. (highest risk portfolio (=100% equity risk)) (returns in USD), beating our same-risk benchmarks for all portfolios, with outperformance going as high as 4-5% p.a. for higher-risk portfolios. Well done, ERAA (and its father Freddy!)!

Part of the “investing that makes sense” promise meant putting risk management before anything else. Since our launch, we went through a correction in Q4 2018 and the COVID-induced market crash in Q1 2020: our portfolios performed very well through these volatile periods, and clients that stuck to their plans achieved very positive returns. 

What we promised were not just good returns, but a great customer experience as well. On this metric, we have received good feedback from our clients throughout the years, both via private channels, as well as through ratings and comments in the app stores. In order to make sure we keep ourselves focused around providing a consistently exceptional experience to our clients, we have an automated bot that posts all feedback into an internal slack channel that all employees read. 

Fundraising

StashAway raised USD 36M in funding, in 5 rounds, in its 4.5 years of existence. 

In November 2016, we raised a USD 550k round from angels; as the round was led by the 3 co-founders, this was an easy one to raise. In early 2017 we started talking to investors as we needed to raise USD 2M in order to have the required minimum capital for the Fund Management license we had applied for, and to have working capital to build the product and launch it. I personally met with 125 investors, and 124 of them said that they liked the team, but that they did not believe it was feasible to build a direct-to-consumer player in this industry; quite a few investors invited us to pivot and build a B2B player, to build technology for the banks. It was tough to keep receiving feedback that what we were spending 16 hours/day on, was not going to work. It was particularly tough because most of these investors were very smart and experienced people; did they know better? We finally managed to convince Aaron and Francis Rozario from Asia Capital & Advisors (ACA) to invest. They believed in the founding team and the vision of StashAway, covered the entire funding round, and even led our following Series A round over USD 5.3M. We are thankful to have found such strong backers in the early days who paved the way for the company’s success.

We raised 2 further rounds of funding, a USD 12M Series B round in July 2019, led by Eight Roads (Fidelity) and participated by ACA, and a USD 16M Series C round in August 2020, led by Square Peg and participated by Eight Roads and Burda Principal Investments. Raising the later rounds was a very different experience as we now had a track record: investors could look at numbers and talk to our clients or read their reviews. StashAway’s 4.6 rating on Apple and Play Store definitely played a role in convincing investors that perhaps there was space for a B2C digital wealth manager.

Going International

Nino, Freddy, and I always had in mind that StashAway would operate across a few countries. So, we built the company with this idea in mind from the beginning, and started working on our 2nd country immediately after seeing traction in Singapore. We went live in Malaysia in November 2018, 17 months after Singapore. Malaysia was our first international market because the regulator had built a framework for our business model, and because of its size and wealth per capita. Malaysia over time also became an operational hub, and we now have approximately 30% of our team working out of our brand new KLCC office.

With two markets already stretching our limited resources, both money and people, we took a pause in our international expansion, and focused on improving our services to our clients in Singapore and Malaysia, extending our asset class universe from 21 to 32, introducing StashAway Simple and the Income portfolio, embedding Whatsapp into our app, as a channel to reach our client experience team, and investing in our educational arm, StashAway Academy.

In 2020 we refocused again on international expansion, launching our services in the Middle East, based in the Dubai International Financial Centre, and opening offices in Bangkok and Hong Kong.

Growing the team

As we kept growing, we strengthened our team at all seniority levels.

If there is one thing I am proud of the most, it is the quality of our team. We have managed to attract and excite incredibly talented people across all functions, at all levels of seniority. As an example, we were able to attract high potential young professionals early on, who grew quickly within the company and now manage teams with significant responsibilities: seeing them grow and thrive is one of the most satisfying parts of my job.

At the end of 2016, we had a team of 10 people which grew to over 20 people by the end of 2017 and to over 30 by the end of 2018. Over the past 2 years we grew faster, with 60 people at the end of 2019 and around 140 at the end of 2020: we have built a structure able to sustain further hypergrowth in the years to come. 

2020 obviously was a year of big changes, more than doubling the size of the team, going from 2 to 5 offices and working remotely for the majority of the time. Once again, I’m very proud that we were able to keep our hiring bar very high, and managed to continue to attract the talent needed to make StashAway even stronger.

Looking ahead

USD 1B is a great milestone that is worth celebrating, but this is obviously just the beginning of the journey. There is USD 4+ trillion of financial wealth in the countries that we cover, and 40%+ of this money currently sits in cash/savings accounts, yielding very low returns and not contributing to building people’s long-term financial peace of mind. We can help change that, giving access to sophisticated investing through our simple to use, convenient and cost-efficient platform. 

I am very aware that we will face new challenges and road bumps and that we will need to continue working hard (and smart!), and have the energy and resilience to endure the natural ups and downs of building a company. I am very much looking forward to continuing promoting our presence across markets, building new features that bring value to clients and ultimately continuing to deliver a quality of service that people are not used to receiving from most financial institutions.

Learnings 

Here’s a compilation of my learnings from these last 4.5 years (and a couple from my previous experience). It is not meant to be comprehensive; these are the main learnings that came to my mind as I was summarizing StashAway’s journey so far:

• You’ve heard this before, but I’ll repeat it. And if you want to remember just one thing from this article, it is this: people are everything. If you are building a company, surround yourself with people smarter than you, who complement you, and who share your values. Pragmatically: 

1. Don’t hire anyone until you are 120% convinced, it’s better to wait 2 more months and find the right person, instead of rushing it and hiring the wrong person.
2. Never lower the bar, for any role or any seniority.
3. If you make hiring mistakes (and you will), correct them quickly.
4. Attitude and aptitude are more important than experience, for 99% of jobs.

• Choose carefully your co-founders: the only way to build a very strong team is to start by partnering with the right co-founders. One of the reasons that Nino, Freddy, and I are working very well together is that we have very complementary skill sets and experiences: Nino spent 18 years as a CTO/tech founder, Freddy spend 20+ years as an investor, and I spent 18 years as a business person with broad responsibilities. How do you choose great co-founders? I don’t think there’s a recipe, it’s like trying to say how do you find a great wife/husband…! There’s a lot of gut-feeling! The two aspects I focused most of my attention on were domain expertise (i.e., are they the best at what they do?) and personal fit (i.e., will I enjoy spending 12 hours/day with them, even when things get tough?)
• Make sure your family is supportive, and that you can afford (monetarily and psychologically) a few mistakes. Building a company will push you through several ups and downs, and you need to have a solid support structure to be able to endure them. I would have not been able to build StashAway for the last 4.5 years without the support of my wife Ludo, who resembles Mary Poppins as she takes care of our 3 kids (and me!!!) without much help.
• Do things one step at a time: even marathons are run this way. Building a company is a daunting task, but if you break it into smaller steps, it will seem more doable.
• Focus on clients and team members’ happiness: your colleagues are your biggest asset, and you need to make sure it’s clear to them that their goal is to make clients happy. The rest will work itself out.
• Be frugal. Learn to stretch the dollar and don’t change your habits just because you raised more money. And don’t raise more money just because you can: raise what you need.
• Be lucky with timing… I know this is not something you can influence, but getting the timing right is very important, and incredibly difficult.