Over 26 million Health Savings Accounts control USD 61.7 billion in assets in the US today. However, the healthcare industry is the primary beneficiary of that total
Fremont, CA: Human-centric healthcare savings platform First Dollar secured USD 5 million in a seed round of funding led by Next Coast Ventures, with participation from Meridian Street Capital. The seed investment round was also participated by former Athenahealth CEO Jonathan Bush, EverlyWell CEO Julia Cheek, Bright Health CTO Brian Gambs and Capital Factory. Proceeds from 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.
"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." Over 26 million Health Savings Accounts control USD 61.7 billion in assets in the US today. However, the healthcare industry is the primary beneficiary of that total.
Majority of the users allow their contributions to sit idle, turning a potential investment vehicle into an under-utilized bank account. A mere 11 percent of participants maximize their contributions each year, and only 13 percent invest their HSA savings for growth. To add to the dismal figures, many HSAs charge a monthly fee, so savings are slowly depleted by as much as USD 100 per year. "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. "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."
See also: Top Healthcare Solution Companies