- Human-centric health care savings platform First Dollar announced it raised $5 million in seed funding
Human-centric health care savings platform First Dollar has announced it raised a seed round of funding of $5 million led by Next Coast Ventures with participation from Meridian Street Capital.
The additional investors in the round include former athenahealth CEO Jonathan Bush, Everlywell CEO Julia Cheek, Bright Health CTO Brian Gambs, and Capital Factory. And the funding will be used to recruit engineers and designers to scale the HSA offering and build new functionality for First Dollar’s platform.
Currently, the nation’s 26+ million Health Savings Accounts control $61.7 billion in assets. However, the healthcare industry is the primary beneficiary of that total. And most users allow their contributions to sit idle thus turning a potential investment vehicle into an under-utilized bank account. Only 11% of participants maximize their contributions each year and just 13% invest their HSA savings for growth. Plus many HSAs charge a monthly fee so savings are slowly depleted by as much as $100 per year.
In order to solve these problems, First Dollar co-founders Jason Bornhorst and Colin Anawaty decided to build an HSA that people should use. It does not have any monthly fees and there will be a heavy focus on easy-to-understand language along with education on how to maximize savings.
First Dollar is known for targeting Millennials and Gen Z, a generally healthy population that typically spends too much per year for more coverage than they need. And only 1 in 5 people in those demographics reach their deductible amount each year. First Dollar believes they would be better served by putting the money they spend on premiums into a simpler and 100% fee-free HSA account.
“HSAs are the worst-marketed health care benefit in the United States. Most of them are effectively little-used bank accounts. We’re building a product that not only helps you maximize your savings but also offers great health care at a great price. We believe that for every $1 you put into your First Dollar HSA, you should get $2 in value back in savings and spending.”
– First Dollar co-founder Jason Bornhorst
“I’ve been an HSA user for years, and it’s an amazing tool if you know how to use it. The products on the market, though, don’t live up to the power of the HSA. I’m excited to build a product that people will love that makes their finances healthier and also helps them make more informed decisions about their long-term health.”
– First Dollar co-founder and chief product officer Colin Anawaty
“Two of the biggest concerns on people’s minds today are their money and their health. In an ever-changing healthcare market, it pays to have leaders who know the space. As co-founders, Jason and Colin know this marketplace, having sold their previous company to athenahealth and then running athenahealth’s Austin office. We’re excited to partner with them as they redefine an old industry to help consumers get more for their money.”
– Next Coast Ventures co-founder and managing partner Michael Smerklo
“Individuals and employees are increasingly taking responsibility back from the employer with regards to managing and spending their healthcare benefits. After having worked closely with Jason and Colin from idea to company formation, I believe their unique blend of experiences in both consumer technology and health care will enable First Dollar to become the go-to resource for every American when it comes to healthcare benefits.”
– Scott Law, general partner at Meridian Street Capital