First Dollar raises $5 million

First Dollar, “the first human-centric health care savings platform,” has closed a Seed round of $5 million led by Next Coast Ventures, with participation from Meridian Street Capital and Capital Factory as well as individual investors including former athenahealth CEO Jonathan Bush, Everlywell CEO Julia Cheek, and Bright Health CTO Brian Gambs.

In America, more than 26 million Health Savings Accounts control $61.7 billion in assets, but the healthcare industry is the primary beneficiary of that total as most users allow their contributions to sit idle. Only 11% of participants maximize their contributions each year, and only 13% invest their HSA savings for growth, according to First Dollar. To solve these problems, the Austin-based startup led by Jason Bornhorst and Colin Anawaty is building an HSA people will actually use while eliminating monthly fees, and focusing heavily on easy-to-understand language, education on how to maximize savings and an offering of high-quality health care products at fair prices.

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 and 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.

First Dollar works directly with employers and end users. It charges employers a monthly administration fee to manage payroll contributions and HSA reporting, and allows consumers to set up a free account through their site and manage their money there. The company also issues a First Dollar debit card, and makes money from a percentage of transactions on the debit card.

“HSAs are the worst-marketed health care benefit in the United States. 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.” – Jason Bornhorst, First Dollar CEO.

“I’ve been an HSA user for years, and it’s an amazing tool if you know how to use it. 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.” – Colin Anawaty, First Dollar’s chief product officer.

“Two of the biggest concerns on people’s minds today are their money and their health. 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.” – Mike Smerklo, Next Coast Ventures cofounder and managing partner.

“Individuals and employees are increasingly taking responsibility back from the employer with regards to managing and spending their healthcare benefits. 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.” – Scott Law, general partner at Meridian Street Capital.