One of the hottest Y Combinator startups merely raised a big seed round to clean up the mess created by Uber, Postmates and the gig economy. Catch sells health insurance, retirement savings plans and taxation withholding directly to freelances, contractors, or anyone uncovered. By building and curating simplified benefits services, Catch can offer a safety net for the future of work.
” In order to bide competitive as a society, we need to address inequality and volatility. We believe Catch is the first step to offering alternatives to the mandate that benefits was simply come from “the employees ” or the government ,” writes Catch co-founder and COO Kristen Tyrrell. Her co-founder and CEO Andrew Ambrosino, a former Kleiner Perkins design fellow, stumbled onto the problem as he struggled to juggle all the paperwork and programs companies typically hire an HR manager to handle.” Defining up a benefits plan was a pain. You had to become an expert in the space, and even once “youre ever”, executing and getting the stuff you needed was pretty difficult .” Catch does all this annoying but essential work for you.
Now Catch is get its first press after piloting its product with tens of thousands of users. TechCrunch caught breeze of its highly competitive seed round closing, and Catch confirms it has raised $5.1 million at a $20.5 million post-money valuation co-led by Khosla Ventures, Kindred Ventures, and NYCA Partners. This follow-up to its$ 1 million pre-seed will fuel its expansion into full heath insurance enrollment, life insurance and more. Catch is part of a growing trend that find the best Y Combinator startup fully funded before Demo Day even arrives .
” Benefits, as a system built and provides for employers, created the mid-century middle class. In the post-war economic boom, companies offering benefits in the form of health insurance and pensions enabled familial stability that led to expansive growth and prosperity ,” remembers Tyrrell, who was formerly the director of product at student indebtednes repayment benefits startup FutureFuel.io.” Emboldened by private-sector growth( and apparent self-sufficiency ), the 1970 s and 80 s assured a massive switching in financial risk management from the government to employers. The public safety net contracted in favor of privatized answers. As technological advances progressed, employers and employees continued to redefine what work looked like. The bureaucratic and inflexible benefits system was unable to keep up. The private safety net disintegrated .”
That problem has ballooned in recent years with the advent of the on-demand economy, where millions become Uber drivers, Instacart shoppers, DoorDash deliverers and TaskRabbits. Meanwhile, the destigmatization of remote work and digital nomadism has turned more people into permanent freelancers and contractors, or full-time employees without benefits.” A new class of employee emerged: one with volatile, complex income rivers and limited access to second-order financial products like automated savings, individual retirement plan, and independent health insurance. We entered the new millennium with rot under the surface of new opportunity from the proliferation of the internet ,” Tyrrell declares.” The last 15 years are borrowed day for the unconventional proletariat. It is time to come to terms and design a safety net that is personal, portable, modern and flexible. That’s why we built Catch .”
Currently Catch offers the following services, each with their own route of earning the startup revenue 😛 TAGEND
Health Explorer lets users compare plans from insurers and calculate subsidies, while Catch serves as a broker collecting a fee from insurance providers Retirement Savings gives users a Catch robo-advisor compatible with IRA and Roth IRA, while Catch earns the industry standard 1 basis phase on saved assets Tax Withholding provides an FDIC-insured Catch account that automatically saves what you’ll need to pay taxes afterward, while Catch earns interest on the funds Period Off Savings similarly lets you automatically squirrel away fund to finance “paid” time off, while Catch earns interest
These and the rest of Catch’s services are curated through its Guide. You answer a few questions about which benefits you have and want, connect your bank account, select which programs you want and get push notifications whenever Catch requires your decisions or approvings. It’s designed to minimize busy run so if you have a child, you can add them to all your programs with a click instead of plodding through reconfiguring them all one at a time. That simplicity has ignited explosive growth for Catch, with the balances it holds for taxation withholding, time off and retirement balances up 300 percent in each of the last three months.
In 2019 it plans to add Catch-branded student loan refinancing, vision and dental enrollment plus payments via existing providers, life insurance through a partner such as Ladder or Ethos and full health insurance enrollment plus subsidies and premium payments via existing insurance companies like Blue Shield and Oscar. And in 2020 it’s hoping to build out its own mixed retirement savings solution and income-smoothing tools.
If any of this sounds boring, that’s kind of the phase. Instead of sorting through this mind-numbing stuff unassisted, Catch holds your hand. Its benefits Guide is available on the web today and it’s beta testing iOS and Android apps that will launch soon. Catch is focused on direct-to-consumer marketings because” We’ve seen too many startups waste time on channels/ partnerships before they know people truly want their product and get lost along the way ,” Tyrrell writes. Eventually it wants to set up consolidations immediately into where users get paid.
Catch’s biggest competition is people haphazardly managing benefits with Excel spreadsheets and a mishmash of healthcare.gov and solutions for specific programs. Twenty-one percent of Americans have saved$ 0 for retirement, which you could see as either a challenge to scaling Catch or a massive greenfield opportunity. Track.tax, one of its direct challengers, charges a subscription cost that has driven users to Catch. And automated advisors like Betterment and Wealthfront accounts don’t work so well for gig employees with lots of income volatility.
So do the founders suppose the gig economy, with its suppression of benefits, helps or hinders our species?” We believe the tale is complex, but overall, the existing country of the gig economy is hurting society. Without better systems to provide support for freelance/ contract employees, we are attaining people more precarious and less likely to succeed financially .”
When I ask what keeps the founders up at night, Tyrrell acknowledges” The safety net is not built for individuals. It’s built to be distributed through HR departments and employers. We are very worried that the products we offer aren’t on equal footing with group/ company products .” For example, there’s a $6,000/ year IRA limit for individuals while the corporate equivalent 401 k limit is $19,000, and health insurance is much cheaper for groups than individuals.
To surmount those humps, Catch assembled a huge listing of angel investors who’ve built a range of financial services, including NerdWallet founder Jake Gibson, Earnest founders Louis Beryl and Ben Hutchinson, ANDCO( be achieved by Fiverr) founder Leif Abraham, Totem founder Neal Khosla, Commuter Club founder Petko Plachkov, Playable( acquired by Stripe) founder Tad Milbourn and Synapse founder Bruno Faviero. It also brought on a wide range of venture funds to open doors for it. Those include Urban Innovation Fund, Kleiner Perkins, Y Combinator, Tempo Ventures, Prehype, Loup Ventures, Indicator Ventures, Ground Up Ventures and Graduate Fund.
Hopefully the fact that there are three result investors and so many more in the round won’t mean that none feel genuinely accountable to oversee the company. With 80 million Americans absence employer-sponsored benefits and 27 million without health insurance and median undertaking tenure down to 2.8 years for people ages 25 to 34 leading to more gaps between jobs, our workforce is vulnerable. Catch can’t operate like a traditional software startup with leniency for screw-ups. If it can move cautiously and fix things, it could earn labor’s trust and become a fundamental piece of the welfare stack.
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