Gone are the days when simplified trading apps were the paradigm shift in financial services. Consumers now demand more.
They want education, information and easy back-and-forth communication with their financial services providers and embedded networks, as well as access.
That’s according to Nikki Varanasi the CEO and founder at Staax, a Techstars- and Western Union Co (NYSE: WU)-backed fintech building the first social, investment-based peer-to-peer payments platform.
Consumers want more than a “ Twitter Inc (NYSE: NYSE:TWTR) meets Robinhood Markets Inc (NASDAQ: NASDAQ:HOOD),” she explained in her conversation with Benzinga on building transparent financial ecosystems targeted at younger demographics.
“They also don’t want to go on any Fidelity, E-Trade, or Robinhood and make their own decisions. They don’t know where to start.”
Inception: Varanasi, alongside Staax’s other founders — COO Lucy Yang and Victoria Yang — are building a Venmo for stocks, essentially.
The team has experience in finance, technology and policy at KKR & Co Inc (NYSE: KKR) and the White House, overseeing funds at McKinsey & Company and building infrastructure at Coinbase (NASDAQ:COIN) Global Inc (NASDAQ: COIN).
What kicked Staax off was that they saw a serious problem with existing stock gift services.
“I was trying to gift my friends stock for Christmas and it was really difficult,” Varanasi explained. “There were fees involved, the recipient’s Social Security number was needed … and it also triggered a tax event because I would have to buy stock and sell it.”
Given that, the Staax founders set ought to create an alternative.
“It evolved beyond stock gifting. It’s more of an embedded peer-to-peer payment use case. Think of us like a Venmo meets Robinhood.”
How It Works: Say after a night out with friends, you decide to pay for your share of dinner.
You can use PayPal (NASDAQ:PYPL) Holdings Inc-owned (NASDAQ: PYPL) Venmo, for instance, or Zelle.
Staax, which had its prototype launch in May of 2021, offers an alternative that enables friends, in this case, to send each other equity in a publicly-traded company.
“You can pay them back in Tesla Inc (NASDAQ: TSLA), Alphabet Inc (NASDAQ: NASDAQ:GOOGL) (NASDAQ: GOOG) and Amazon Inc (NASDAQ: NASDAQ:AMZN) stock.”
As a Venmo meets Robinhood peer-to-peer payments platform, Staax also has an embedded social network. Users can create public profiles and share their favorite stocks and investments.
“Not only can you transact in assets, but you can go on the platform and see what your friends are doing and investing in,” Varanasi said.
“We feel like we’re the very first in the space to do that.”
Scaling Up: As one can imagine, the cost to develop a fintech, unlike any other, is expensive.
Varanasi and the other founders forwent bootstrapping and sought $1.6 million in outside funds from a Western Union accelerator powered by Techstars and Helen Min, as well as Harlem Capital Partners and Lightspeed Ventures.
Staax’s initial beta went live last month to a Phase 1 waitlist group. After launching to a Phase 2 group in April, the public launch is set to happen sometime in May.
“We’re really excited about the feedback and what we’ll hear from the users based on what they want to see or what changes they want,” the founder said about Staax’s go-to-market strategy. “We’ll take that into development as we launch public in May.”
Bonus Bits: More funding would help in accelerating Staax’s launch and innovation timeline.
The group recently presented to Stonks.com, a collective that calls itself the merger of Twitch, AngelList and SharkTank, and garnered $8.5 million in interest from investors in 10 minutes.
“We’re still sifting for the right partner,” though, Varanasi said. “We’re okay with extending [the timeline]. We just redesigned our user interface, as well as hired interns, an engineer and brand ambassadors at universities which helped increase our waitlist numbers by three times.”
The company also just presented to Visa Inc’s (NYSE: NYSE:V) Everywhere Initiative 2022 to get global exposure with the potential to unlock extra funds.
“Six months down the line, we want to have our own brokerage process, so we can actually start making revenue off of that as we hit our user benchmarks,” Varanasi ended.
“Long-term, we want to add a Staax card where you’ll be able to spend at retailers like Nike Inc (NYSE: NYSE:NKE) and get stock back, as well as the ability to trade, send and receive crypto, and DeFi lending aspects where we offer interest on your cash balances.”
Photo: Victoria Yang, Nikki Varanasi and Lucy Yang
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.