Starship: A savings account with superpowers

On a recent trip, I arrived in Charleston, South Carolina for a conference two hours away near Hilton Head. I requested a car from a ridesharing app as I left the airport.

I was greeted by a friendly, middle-aged driver, in her Toyota Camry, and I asked if it was okay that we would be taking a longer trip today as I assumed she would likely have to deadhead back from Hilton Head without a passenger and a fare. She turned back to me and said, “You know, it’s like you were a blessing from God.” I was taken aback. “Why is that?” I asked. She smiled and said, “I’ve always wanted to go to Savannah and driving to Hilton Head means that I’ll only be 30 minutes away. My husband and I were supposed to go there for our anniversary a few months ago, but he got hurt at work and we needed to pay our rent, so I’ve been driving for ridesharing companies. But today I’m going to be able to make my $100 on our trip down to Hilton Head and then I’ll enjoy the rest of the day touring Savannah.”

We then started talking about her job as a driver. She said that she likes the flexibility of being able to make money whenever she turns on her app and work towards making enough money that day to provide for her family. But she also remarked on how precarious a model this was as she and her family are now living day to day and no longer have health insurance, which they lost when she was let go from her previous full-time job as an administrator.

My driver that day in South Carolina is the face of many Americans across the country, in rural and urban areas. America has long presented itself as the land of opportunity, but that opportunity has changed. Our workforce is changing due to advances in technology and globalization that have surely made our economy more dynamic, efficient, and competitive, but that has also resulted in an increase in contracting, outsourcing, and automation, which has had a negative impact on many workers, particularly when it relates to employee benefits such as healthcare coverage.

A changing workforce needs a different structure for workers. With 81% of American households subject to falling or flat incomes from 2005–2014 and increasing cost of living, many Americans have needed to work multiple jobs to make ends meet. It’s no coincidence, then, that 33% of the US workforce are freelancers, many of whom are supplementing a traditional job to make income to either make ends meet or help them develop some financial security as they approach retirement. And this trend is not going away. Over 50% of the US workforce is expected to be freelancers by 2027, so we need to find ways to help Americans keep pace with the future of work as we know it and enable them to feel confident that they can pay for their healthcare when they decide to take on contingent work.

That’s why Sean Engelking, Adam Pruden, and Christoph Oberhofer decided to team up to build Starship, a health savings account that is purpose-built for the future of work.

Starship’s innovative and portable health savings account platform provides companies and their employees (W2s) or gig workers (1099s) with an all-in-one automated health savings account that offers auto investment capabilities, the ability for account holders to manage multiple HSA accounts through the Starship platform, and a built-in credit feature.

Starship’s portable health savings account means that people can hold multiple jobs while maintaining a single health savings account where they can reap the triple tax-free benefits of saving, investing, and paying for eligible healthcare expenses with their Starship account.

Starship is at the intersection of multiple large and growing markets in healthcare, the on-demand economy, and financial services.

There is an increased burden on the individual in America to pay for healthcare, particularly as on-demand companies who employ contingent workers continue to grow and represent an increasing part of consumer spending and the economy. 80% of Americans worry about most health expenses, particularly unexpected health expenses or necessary but expensive treatments. Over 2 million people per year file for bankruptcy due to medical bills and it is estimated that the average individual should have over $300,000 saved at retirement just to cover healthcare expenses.

Meanwhile, companies are no longer the caretakers of their employees — more workers are being left out in the cold by their employee benefit plans due to increasing healthcare costs. This problem is particularly acute for the on-demand “gig” economy, where many workers who either need flexible hours or need to work second jobs are participating in the on-demand workforce but the companies they contract with treat them with 1099 status and do not provide employee or healthcare benefits. The on-demand economy, particularly transportation and food delivery sub-sectors, are growing at a significant pace. Consumer spending in the transportation and food delivery sectors of the on-demand economy has more than doubled from 2016 to 2017, according to research from Rockbridge.

HSAs, which is a type of savings account that enables people to set aside money on a pre-tax basis to pay for qualified medical expenses, have seen significant growth in recent years. HSAs provide a tax-efficient way for people to grow their assets for retirement — and pay for healthcare expenses tax-free along the way. Unused balances in a HSA roll over from year to year, which can help people build financial security for retirement. The HSA market has grown 20% year-over-year and is projected to reach $65 billion in assets by the end of 2019. But while there are a significant amount of assets in HSAs, the majority of HSA assets, 82%, are currently uninvested, according to research from Devenir. This indicates that there is an opportunity to provide a HSA account that enables account holders to invest their assets tax-free into investment products that can help them increase their assets tax-free in their HSA account.

We have witnessed a resolve and steely determination from Sean, Adam, and Christoph as they have built their team and product to partner with leading gig companies like Uber and Postmates and achieve meaningful account growth over the past year. The team has an unmatched passion to help people — they are fueled by a desire to fix a broken healthcare system that leaves many in debt or bankruptcy when they encounter an unexpected medical emergency or expense.

We were incredibly excited to lead Starship’s Seed round in January, join the Board, and participate in their $7M Series A this month led by Valar Ventures. We are thrilled to work with this stellar team and group of investors including Valar, Third Prime, Clocktower Technology Ventures, and 500 Startups as we aim to build a savings account with superpowers so that no American is left out in the cold when it comes to saving for healthcare and retirement.

Partner, FinTech VC @Broadhaven Ventures, Venture Partner @GoodwaterCap. Board @Nowports, @Super @StarshipHSA, @LiveoakNet, @Credijusto, Ex-SVP @iCapitalNetwork