Certain types of businesses have thrived in the pandemic economy. Remote services? Check. Low-cost subscription model? Check. A new employee benefit that helps cash-strapped consumers? Check and double-check.
Just out of stealth, Seattle-based fintech startup Secure Save is on the winning side of all these trends. Its employer-sponsored emergency savings account is a win-win for employers and employees.
Research, and common sense, tells us that employees undergoing financial stress are not as effective in their jobs or frankly in their lives. Business owners employ a number of tools to help (time off, emergency loans, pay raises, and so on), but those are all expensive and difficult to parcel out without appearing to play favorites. They are also typically used AFTER the financial stress has already done major damage.
What if there was something owners could do proactively for every employee? That’s what Secure is launching. They provide the software and services for businesses to establish and manage a so-called Emergency Savings Plan (ESP). Like a retirement plan or HSA, employees agree to have a small percentage of their pay withheld (though a key difference is the savings account if funded after-tax).
That withholding, along with any employee match, are added to the secure account each pay period. Whenever the need arises for emergency funds, employees may access the entire balance via the Secure Savings wallet app. The employer is not involved, nor do they even know about any withdrawal activity.
To use the money, the startup provides virtual debit card numbers in its wallet for in-person, phone, or online purchases. Since these are after-tax dollars, there are no IRS reporting requirements, rules, or penalties for making withdrawals.
In addition, Secure hosts a client-specific financial resource center that employees can use to learn about other company programs and/or access vetted third-party resources.
Secure makes money by charging employers a setup fee, per-user monthly fees and potentially SaaS platform fees. Employees pay nothing to use the account and access funds. And most employers are expected to make some type of match, or periodic bonus, so it should be a net financial gain for users even with no interest paid on balances.
The company was founded by serial entrepreneurs Devin Miller (CEO) and Bassam Saliba (CTO). I got to know Devin at Finovate in his multiple appearances for Balance Financial (2011, 2013) and Finsphere (2010). They have been incubating the new company at Pioneer Square Labs for much of the year and have just gone public with the concept this week. They are currently raising a seed round.
Description: Provides emergency savings plans to employers to provide as an employee benefit
Distribution: Enterprise sales and partnerships
Business model: SaaS
HQ: Seattle, WA
Raised: Undisclosed (currently raising)*
Company links: Website
– Geekwire (23 Nov 2020)
*Full disclosure: I’m considering making a small angel investment in Secure. But I’m writing this not because of that investment but because I’m excited about what the company is doing (which is also why I’m interested in investing).
Unicorn watch: Who will be the first fintech founded in 2019 or 2020 to become a unicorn? Make sure you follow our Fintech Unicorn list for the latest in billion-dollar valuations.