Bengaluru-based automated investing app Stack has raised $4.5 Mn in a seed round. The round saw participation from Y Combinator, Harvard Management, Goodwater Capital, Soma Capital, Uncommon Capital and Earlsfield Capital.
Other investors that participated in the current round include Magic Fund, Side Door Ventures, Dragon Capital, Emles Ventures, Grand Park Ventures, Chandaria Capital, Cleo Capital, AngelList, West Quad, and Olive Tree Capital. Well known angel investors such as Portage Ventures’ Paul Desmarais III, Squareyards’ Tanuj Shori and Mercury Bank’s Inmad Akhund also took part in Stack’s recent round.
The platform, which provides customised, automated investing solutions to the users, plans to use the funds to expand its current team. The startup further plans to enable more features to help users manage their money better.
Founded in 2021 by Smriti Tomar and Tushar Vyas, Stack’s founding team also consists of Vidit Varshney and Yashwarshan Puranik. Stack is a mobile-first platform, aimed at the young and millennial-led population who will be /are first-time investors. The startup boasts a Nobel-prize-winning algorithm and AI-driven portfolio allocation strategy known as the ‘Smart Stack Approach’.
Users only need to answer a few quick questions, and the app suggests a suitable investment portfolio. It offers tailored investment strategies with globally diversified portfolios for everyday investors according to their risk appetite and goals for investment. The platform is currently free for users as it aims to democratise financial inclusion and investment education. It will later monetise through advanced investing strategies and tools at a nominal cost.
According to the startup, 10 Mn+ Demat accounts were added in 2021 alone, signalling an accelerated financial awareness in India. But DIY wealth management was never easy, and small/retail investors essentially relied on neighbourhood agents to make investment decisions.
“Despite this growth, 75% of these accounts have little to no activities due to a conservative investing attitude and lack of understanding of the equity markets. Equity market participation in India is still stagnated at 3.7%, compared to China’s 12.7% and US’ 56%. Stack aims to increase the participation of Indians into equity markets by using smart automation to make investing simple and easy for everyone,” the company said in a statement.
With the increasing number of fintech players entering the market, a visible shift towards robo advisories or financial advisory services based on industry 4.0 can be seen.
It is expected that the wealth management space, currently occupied by players like Cube Wealth, Groww, CRED, Capearth, ETMoney, WeRize, Kuvera. Amazon-backed Small Case will see a shift towards hybrid deeptech advisories where users can access AI/ML-powered advisories with options for interactions with human advisors.