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Exclusive: Flexible benefits startup Benepass raises $20M

Jan 31, 2024
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Illustration: Aïda Amer/Axios

Benepass, which helps businesses provide flexible benefits packages to employees, has raised $20 million in new funding led by Portage and Clocktower Technology Ventures, the company tells Ryan exclusively.

Why it matters: By improving access to benefits programs, the company increases employee engagement and retention.

How it works: Benepass enables employers to implement, administer and track flexible and personalized employee benefits programs.

  • In a single platform, it combines pre-tax benefits — health savings accounts (HSAs), flexible spending accounts (FSAs), and commuter benefits — along with employee perks like wellness programs, family and child care benefits, lifestyle spending accounts, and remote work stipends.
  • Employees can view their benefits through a mobile app and use a single debit card to spend benefit dollars at selected vendors and merchants.
  • Employers decide how much money is available for various benefit programs, identify which employees can access which perks, and define where the card can be used.

Zoom out: On average, about 30% of total compensation cost is attributable to employee benefits, says Benepass CEO Jaclyn Chen.

  • But the average employee doesn't know all the benefits their companies provide, and very few take advantage of most programs available.

Zoom in: Benepass says it combines all benefits in one place and provides a debit card to access them, generating an employee engagement rate of over 85% on the platform.

Between the lines: The company's revenue comes mostly from charging employers a SaaS fee, typically per employee monthly or annually, Chen says.

  • It also makes some money off interchange fees from its debit card, as well as some interest income.

What's next: Benepass plans to grow its go-to-market team, invest in channel partnerships and build a broker channel for reaching more employers.

Of note: Along with the financing, Portage partner Stephanie Choo has joined the Benepass board.

  • Workday Ventures and existing investors Threshold Ventures and Gradient Ventures also participated in the round.
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