Financial-services startup Honest Dollar launched this week, closing a $3 million seed round and winning the ReleaseIt competition at SXSW 2015.
The startup first surfaced in the news last fall as a “stealth-mode” endeavor to reform the financial-services industry, but has since emerged as a solution for affordable retirement plans for companies. Founders Will Hurley (or whurley, as he’s known within the Austin tech world) and Henry Yoshida introduced the company earlier this month at SXSW 2015, heralding its beta period.
The company’s aim is to make retirement plans more accessible for employers and employees, who Hurley and Yoshida have found are often discouraged by the bureaucracy, expenses, and general confusion inherent in maintaining a 401(k) or IRA.
“There were a variety of inspirations [to turn our focus to retirement], but the one that stuck with me the most was walking into a big-box hardware store and speaking to one of the older employees about why he was working there,” Hurley said. “Long story short, it was because he needed the money because of a retirement system that had failed him and millions of other Americans.”
In addition to launching their beta period, Hurley and Yoshida won the SXSW ReleaseIt competition, in which a panel of “technology industry experts, venture capitalists, and high-profile media” judge the three-minute pitches from 10 startups, selecting the product or service they deem most likely to succeed in its marketplace.
“We had expected the judging to be tough, and our expectations were exceeded,” Hurley said. “The judging panel was incredibly experienced, and there were no easy questions. We also really enjoyed watching the other pitches; my favorite was the guitar that you could simply fold up and throw into a bag.”
In an attempt to reduce employer liability, Honest Dollar charges companies $10 per month per employee and provides plans comparable to a Simple IRA. Employees can contribute up to $12,500 a year – $7,000 more than the cap for a standard IRA. Employers also have the option to offer qualifying employees a Simplified Employment Pension.
The funding, provided by a syndicate of investors including Expansive Ventures, Formation 8, and Core Innovation Capital, will be used for hiring, Hurley said.
“Honest Dollar already has an amazing team made up of incredible engineers who have worked for Apple, IBM, NASA, Airbus, Astrium, Argonne National Lab, and the Federal Reserve combined with financial experts who have worked at J.P. Morgan, Prudential, Mercer and Merrill Lynch,” he said. “With this investment, we'll be able to expand on this team and accelerate our release timeline.”