Sharesies has yet to tap markets for more capital as the online trading platform pivots to significant staff cuts and a new pricing model to stem cash-burn ahead of an expected recession.
According to industry sources, the Wellington-headquartered firm had been sounding out investors for another injection of equity cash prior to the recent staff and fee changes but a spokesperson for the group said Sharesies “does not currently require capital”.
“However, raising capital is something that we always continue to evaluate,” the spokesperson said. “Right now it’s not our highest priority.”
The group confirmed last week looming staff cuts at the loss-making business that reportedly employed over 200 people across NZ and its start-up division in Australia. Online chatter from former employees suggest Sharesies could slash up to a third of its workforce with a more conservative figure of 20 per cent also mooted.
BusinessDesk reported Sharesies burnt through almost $46 million over the 12 months to June 30 last year after booking a $25.1 million loss on revenue of $20.7 million.
Many start-up firms globally have been forced to raise cash at much lower valuations – the dreaded ‘down-round’ – amid rising interest rates and shrinking private equity largesse.
Volatile markets took the shine off the post-COVID retail share-trading boom in 2022 in a trend that has seen similar online platforms offshore cut staff and increase fees.
For example, in January this year the trans-Tasman online share-trading service and Sharesies competitor, Stake, announced the end to its zero brokerage fee model with price hikes slated for March.
“Alongside rising costs of providing our service, as Stake transitions from disruptor to Australia’s leading modern brokerage, this change is part of continuing to build out a robust financial services company offering you trusted, world-class products and services,” the company said in a statement.
But other online share-trading platforms, notably the US fee-free pioneer, Robinhood, have also taken the axe to staff numbers and shifted to recurring fee models as economic reality bites.
Last December, too, UK industry publication, Citywire, reported that Wellington-originated financial technology firm, FNZ, was looking to reduce staff numbers by 400 globally with the cutbacks including the NZ arm of the business. FNZ bought the former Kiwi Wealth US share-trading platform, Hatch – which competes with Sharesies and Stake among others – for $50 million in 2021.
(Meanwhile, it is understood Kiwi Wealth staff learned of an impending restructure following a meeting with new owner, Fisher Funds, last Friday.)
In more optimistic times in 2021, Sharesies raised $50 million from a broad group of investors including US venture capital outfit, Amplo, that valued the business at about $500 million. Sharesies has about 500,000 users across NZ and Australia and roughly $2 billion under administration.
Aside from the staff cuts and fee hikes (centred on new monthly subscriptions), Sharesies is set to roll out a new KiwiSaver scheme in the first half of this year.
Alison Gerry, Sharesies chair, said in a statement last week that the staff cuts, marketing pull-back and revenue diversification followed a “recession plan put in place last year”.