First Dollar Raises $5M Seed Funding to Build a Better HSA

by Gordon Gottsegen
May 6, 2020
HSA
Photo: Shutterstock

In the United States, it’s hard to think about healthcare without thinking about its associated costs. Over-inflated prices and surprise medical bills can mean financial hardship for people who don’t have the right insurance.

To plan for this, many Americans turn to health savings accounts (HSAs), which allow people to put aside their pre-tax dollars to save up for medical expenses. There are over 26 million HSAs in the U.S., which collectively control $61.7 billion in assets. A lot of this money just sits around idly.

So, this week, Austin-based startup First Dollar launched out of stealth with a mission to put that money to good use. The company also announced that it raised $5 million in seed funding from Next Coast Ventures and Meridian Street Capital.

“HSAs are the worst-marketed healthcare benefit in the United States,” First Dollar CEO Jason Bornhorst said in a statement. “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.”

Unlike other HSAs, First Dollar offers an HSA account with no monthly fees. It’s designed to let account owners see their balances and help them save money when they can.

First Dollar is designed for Millennial and Gen Z savers who are typically healthy and overinsured. Only one in five people in this demographic reach their deductible each year, and, as a result, they end up spending a lot more on insurance premiums than they need to. First Dollar believes that this money would be better used if it were put in an HSA instead.

The seed funding will help the company hire engineers and designers to scale its HSA offering and build out new functions.

“I’ve been an HSA user for years, and it’s an amazing tool if you know how to use it,” First Dollar Chief Product Officer Colin Anawaty said in a statement. “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.”

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