AUSTIN, Texas--(BUSINESS WIRE)--First Dollar, the first human-centric health care savings platform, has announced it has closed a seed funding round of $5M. Next Coast Ventures led the round with participation from Meridian Street Capital.
Additional investors in the round include former athenahealth CEO Jonathan Bush, Everlywell CEO Julia Cheek, Bright Health CTO Brian Gambs and Capital Factory. The funding will be used to recruit a top team of engineers and designers to scale the HSA offering and build new functionality for First Dollar’s platform.
Today, the nation’s more than 26 million Health Savings Accounts control $61.7 billion in assets, but the healthcare industry is the primary beneficiary of that total. Most users allow their contributions to sit idle, turning a potential investment vehicle into an under-utilized bank account. Only 11% of participants maximize their contributions each year, and only 13% invest their HSA savings for growth. Even worse, many HSAs charge a monthly fee, so savings are slowly depleted by as much as $100 per year.
Empowering Consumers with a Modern Health Care Savings Account Platform
To solve these problems, First Dollar co-founders Jason Bornhorst and Colin Anawaty set about building an HSA people will actually use. There are no monthly fees, and there will be a heavy focus on easy-to-understand language, education on how to maximize savings and an offering of high-quality health care products at fair prices. No other company offers this complete ecosystem.
“HSAs are the worst-marketed health care benefit in the United States,” said Bornhorst, First Dollar CEO. “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.”
“I’ve been an HSA user for years, and it’s an amazing tool if you know how to use it,” said Anawaty, First Dollar’s chief product officer. “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 targets Millennials and Gen Z, a generally healthy population that typically spends too much per year for more coverage than they need. 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 simple, informative, 100% fee-free HSA account.
Investor Perspectives on First Dollar Seed Funding Round
“Two of the biggest concerns on people’s minds today are their money and their health,” said Mike Smerklo, Next Coast Ventures co-founder and managing partner. “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.”
"Individuals and employees are increasingly taking responsibility back from the employer with regards to managing and spending their healthcare benefits," said Scott Law, general partner at Meridian Street Capital. "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."
About First Dollar
First Dollar is revolutionizing how people think about and interact with healthcare. Founded in October 2019 by repeat successful entrepreneurs Jason Bornhorst and Colin Anawaty, First Dollar’s powerful platform helps people save for out-of-pocket expenses and find great health care for a fair price. With $5 million in funding, First Dollar is building the first human-centered health care experience. For more, visit firstdollar.com.
About Next Coast Ventures
Next Coast Ventures is an Austin-based venture capital firm that partners with entrepreneurs building high-growth companies in ‘Next Coast’ markets. The firm uses macro trends and themes to guide its investment strategy, providing early-stage capital to founders scaling companies across the consumer, enterprise and emerging platform sectors. NCV focuses on bringing value to its founders post-investment by equipping its growing portfolio with hands-on, company building resources through its strong industry network, Entrepreneurs Council program and applying the partners’ own operational experience as entrepreneurs. Learn more at www.nextcoastventures.com.