Digital benefits startup First Dollar has raised $14 million led by the venture arm of the Blue Cross Blue Shield Association, with participation from Next Coast Ventures and Meridian Street Capital, the company announced Thursday.
First Dollar, which offers a digital wallet that consumers can use to spend money with tax advantages like health savings accounts, is adding the Series A round to angel investor money, Fay Rotenberg, CEO of Firefly Health, Brian Gambs, CTO of Bright Health Group, RPM Ventures Managing Director Marc Weiser and more. The Austin-based company said it raised $19 million in total venture capital funding.
“Paying for care is the primary way consumers engage with their health plans. However, the consumer payment experience today requires consumers to navigate a complex web of health care benefits, spending and payment card accounts,” said Michael Spadafore, managing director of the Blue Venture fund. , said in a press release. “First Dollar’s platform and vision for powering a unified healthcare portfolio is key to streamlining how consumers pay for healthcare.”
The startup came out of beta in May 2020 and was co-founded by Colin Anawaty and Jason Bornhorst, who sold their care coordination startup Patient IO to athenahealth for an undisclosed amount in 2016. The former CEO of Athenahealth , Jonathan Bush, is also an angel investor in First Dollar. .
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The company started out focusing on drug discounts through a partnership with RxSaver, and has now expanded to streamline consumer use of tax-advantaged savings accounts, like HSAs or additional benefits. . In the two years since the company launched, its clients include cash-based start-up Sidecar Health and digital brokers KindHealth and Decent Health. The startup plans to invest the Series A funding to grow its platform to accept additional types of benefits.
Despite the growing popularity, value, and assets associated with HSAs, First Dollar says very few people actually use the funds that they — or their employer — contributed to the accounts through poor UX. The accounts, which are only available to people with high-deductible health plans, reached $92.9 billion in assets in more than 31 million accounts at the end of June 2021, with account value growing by 26% year over year and the number of accounts up 6%, according to research by the HSA Becoming Advisory Group. The company said HSA’s assets had doubled over the past three years.
UnitedHealth Group’s Optum Financial claims to be the leading provider of HSAs nationwide with over 8 million accounts. The space has also attracted other corporate-backed competitors, including San Francisco-based Lively, which raised $122.2 million in funding.
