Elevate Secures $12M Series A to Revolutionize Pre-Tax Benefits

The Crucial Role of Company Benefits in Talent Acquisition

The attractiveness of a company’s benefits package is a significant factor in attracting skilled professionals. A cornerstone of these packages is the 401(k) plan, alongside consumer-directed benefits – employer-provided accounts designed for specific, often tax-advantaged, expenditures.

Introducing Elevate: A New Approach to Benefit Management

Elevate is a recently launched company aiming to revolutionize how both employers and employees interact with consumer-directed benefits. Founded in 2020 by Brian Cosgray, previously of Businessolver, and Brian Strom, founder of ConnectYourCare, the company offers a novel platform.

According to CEO Cosgray, these benefits typically encompass employee out-of-pocket healthcare costs. This includes health savings accounts, flexible spending accounts, commuting allowances, tuition reimbursement, and even reimbursements for adoption or fertility treatments.

The Current Landscape of Consumer-Directed Benefits

Despite 95% of American companies offering these benefits, only 95 million American employees actually utilize them. This occurs as half of Americans are enrolled in high-deductible health plans, and 21% of working adults are considered underinsured. Cosgray explains that consumer-directed benefits programs are intended to mitigate the increasing financial burden on both employers and employees.

The administration of these benefits can be complex due to the intricacies of tax regulations. Cosgray observed this complexity firsthand during his time at a previous company, where he sold these benefits to large employers and consistently encountered issues stemming from a predominantly paper-based system.

“Employees often struggle to understand and effectively use these benefits when confronted with extensive legal jargon,” he stated in an interview with TechCrunch. “Confusion arises regarding which card to use, largely due to the proliferation of cards resulting from industry consolidation. A superior alternative proved elusive during my search.”

Elevate’s Platform and Features

The Denver-based company officially launched on Monday after a year in stealth mode. Its platform provides employees with a unified web and mobile dashboard to view, plan, and manage their pre-tax benefits. A single contactless card is provided for all benefits, and claims are processed instantly, with reimbursements occurring within minutes.

Employers benefit from the ability to customize their offerings using pre-built templates for common plans, and then tailor those plans to their specific market or employee needs.

Funding and Future Plans

To date, Elevate has secured $15 million in total funding, including a new $12 million Series A round co-led by Greycroft and Norwest Venture Partners, with participation from Bowery Capital. The company plans to allocate these funds to expand its sales team, continue product development, and recruit additional personnel for its implementation and service teams.

Cosgray indicated that it is premature to disclose specific growth metrics, but confirmed that the company dedicated the past year to product development and has now onboarded its initial customer base. Rollout to several distribution partners is planned for the first quarter, granting Elevate access to approximately 900 employers.

Industry Perspective and the Future of Benefits

Ellie Wheeler, a partner at Greycroft who invests in the digital healthcare sector, emphasizes that employees now expect user-friendly platforms that rival the ease of use found in other consumer products. They desire flexibility in how they utilize their benefits.

A shift is occurring away from earmarked benefits, such as a $150 allowance for a specific gym, towards more versatile options like a lump sum that employees can allocate to transportation, childcare, or healthcare as they see fit.

Wheeler believes Elevate possesses significant domain knowledge and expertise. The founders are creating a product designed “for the modern world,” avoiding assumptions about employee needs and instead prioritizing flexibility for both employers and employees.

“Their understanding of the market is comprehensive; they aren’t newcomers learning the ropes,” Wheeler added. “They have a clear path to success and have already made significant progress.”