Unlike traditional employees whose employers handle withholding and benefits for them, 59 million independent workers have to find, manage, and pay for their own benefits. Companies like Stride Health and Thimble are making it easier for independent workers to select benefits providers, but independent workers are still in search of an easy way to set aside enough for taxes, healthcare, retirement, and savings — avoiding crippling financial shocks.
Abound says it has solved this challenge with its independent benefits API for businesses that serve independent workers, letting these apps embed individual benefits and automate contributions in a tax-optimized way for the worker. The company plans to use its $6 million in funding to grow its team, expand its product offering to additional benefits, and keep up with new feature requests from customers.
This news comes at a time when the pandemic’s public health crisis and impact on small businesses have highlighted the growing financial security gap between employees and independent workers that was already decades in the making. In November 2020, California voters approved a ballot measure that reaffirmed gig workers as independent contractors while committing gig economy companies to make benefits more accessible to their workers. Proposition 22 is widely seen as a potential template by gig economy companies for other states seeking to reclassify 1099 workers as employees.
CEO Trent Bigelow, who co-founded the company with Alex Cram and Chris Labasky after extensive first-hand experience working in the 1099 economy, including Labasky who previously co-founded gig economy company Favor Delivery, said the company’s mission is to make independent workers more resilient through independent benefits.
“We believe the best businesses in the independent economy will win through independent benefits because it increases retention, revenue, and compliance,” Bigelow said. Adding, “Independent workers are naturally going to want to work with the apps that make earning 1099 income feel more like a stable, regular job.”
The company is already powering smart tax contributions for fintech apps like Lance and Wingspan. Abound is also partnering with Banking-as-a-Service providers, including Unit, to make integrating the company’s API simpler for businesses already rolling out their own banking products. Additionally, Abound will be the first data enrichment provider available on Plaid Exchange, enabling Plaid’s customers to create functionality around benefits for 1099 workers.
The round was financed entirely by Point72 Ventures, an investor focused on fintech and AI and with ties to the financial services industry. The company’s prior investors include nbkc bank and 500 Fintech.
“Abound is addressing a massive pain point for the rapidly growing number of 1099-economy platforms and workers,” said Pete Casella, Partner at Point72 Ventures, who led the financing. “We believe the Abound team has developed a powerful solution that meets the critical needs of this important population by enabling them to accurately understand their income, plan for their financial health, and avoid surprises when filing year-end taxes.”