Fintech

A Black Female Fintech Founder Leaned Into Her Differences To Raise $6.2 Million

The Sika Health team, Ami Kumordzie MD/MBA on right

Philip Vukelich

Ami Kumordzie, MD/MBA and founder/CEO of Sika Health, raised $6.2 million in a round led by Forerunner Ventures. The startup helps employees maximize their FSA/HSA healthcare benefits.

Americans with Flexible Spending Accounts (FSA) and Health Savings Accounts (HSAs) save on qualified medical benefits using tax advantage dollars. These benefits include the obvious ones like prescriptions and less obvious ones like condoms, mattresses, shoe inserts, and travel pillows.

More than 40% of workers with FSAs forfeit some of their contributions because they need to use their benefits before the deadline. HSAs are available to consumers with high-deductible health insurance plans. The money in them can be rolled over to the following year. Seventy million Americans are enrolled in these accounts. To get the most out of your FSA/HSA accounts, you and the merchant you’re purchasing from need to know what is eligible for reimbursement.

A black female-founder physician with no technical experience has developed a fintech platform to connect consumers with IRS-compliant merchants. Kumordzie came to the U.S. from Ghana when she was six. As long as she can remember, she wanted to be a physician. “I observed that people who were the poorest were often the sickest and those in poor health were predisposed to poverty,” she sighed. “It’s a vicious and cruel cycle.

When at Stanford University School of Medicine, she realized how broken the healthcare system was. “I ultimately decided not to go to residency,” said Kumordzie. “Instead, I got an MBA from Stanford. My first job was as a management consultant working for healthcare clients at BCG.” The type of analytical work she did at BCG helped her see the gap in the market and the opportunity.

However, it was her mother’s experience of losing her job as a hotel worker during the Covid-19 pandemic that was the impetus to start Sika Health. “Even though I have worked in healthcare my entire career, I had to scramble and practically become a tax expert to figure out how she [my mother] could spend these funds before she would lose them.”

Kumordzie mother is not alone. In 2020, workers who didn’t use their benefits before the deadline resulted in $4.2 billion of unused benefits.

It’s a two-sided problem. Consumers struggle to determine how to use their FSA/HSA dollars. Merchants who sell these products need help to accept FSA/HSA payments. The market is vast. “About 70 million Americans are enrolled in FSA or HSA accounts, contributing about $150 billion a year,” said Kumordzie. Forfeiting that money is a significant loss to many. “That’s a real tragedy because it is money people could have invested in improving their health,” Kumordzie said.

In inflationary times like these, the need is even greater. “We need more ways to save and tools that help stretch our dollars,” said Kumordzie. “[Using FSA and HSA dollars] effectively means that you’re buying healthcare at 30% off expenses.”

Sika Health helps shoppers pay directly with their FSA/HSA account at checkout. For merchants this … [+] increases revenues.

getty

The financial technology used in Sika Health is similar to PayPal or buy-now-pay-later products. Behind the scenes, the platform handles compliance issues, enabling consumers to save and merchants to grow revenues. To start out the company is focused on e-commerce merchants.

Kumordzie first raised money from friends and family. “The goal was to raise $500,000,” she said. “Within weeks, I surpassed my goal and raised $1.2 million.” Later, she raised a $5 million seed round led by Forerunner Ventures, which is focused on consumers, including healthcare. Also participating in the round were Shine Capital, Ulu Ventures, PrimeSet, Atacama, and the co-founders of fintech API company Plaid, as well as pre-seed funding from One Planet VC and Pacific Health Ventures.

The $6.2 million was one of the most significant early-stage raises by a Black female founder. According to Crunchbase data, Black female founders received just 0.34% of venture capital in the U.S. in 2021. According to Still Building: ProjectDiane 2021 Update, despite more Black and Latinx female founders raising funds, they lost some share of VC funding due to record-level annual investment in 2021.

Brian O’Malley led the seed round on behalf of Forerunner based on deep experience investing in e-commerce, payments and a range of consumer brands. Many of Forerunner’s healthcare portfolio companies recognize the challenges with seamlessly offering customers the opportunity to pay with HSA funds and were seeking a solution. Sika Health’s pre-seed investors understood the potential of solving the problem, too.

Interestingly, it was leaning into her differences and not matching the traditional pattern that VCs often look for that led Kumordzie to success. “I’m a Black female [fintech] founder with a non-traditional background,” said Kumordzie. “It’s my superpower.”

Kumordzie understood the market’s pain point because she had helped her mother figure out how to avoid forfeiting her FSA benefits when she lost her job. As a physician, she understood that it wasn’t just her mother who had the problem. As a healthcare consultant, she understood the opportunity of solving for this pain point.

But there was an obvious hole in Kumordzie’s skill set. She wasn’t a techie. So she hired a team with the fintech-payment chops to build Sika Health. She needed money to hire great tech people. “Hiring at an early stage can feel like a chicken and egg problem,” Kumordzie said. Which comes first, the money or the team? Sika Health was able to hire the founding engineer of the payments team at Etsy.

“Having a brand like Forerunner as one of our backers makes a big difference when you’re trying to hire,” said Kumordzie. “It makes a big difference when you’re having a hiring conversation and trying to convince someone to leave their high-paying stable job to take a risk on an early-stage business.”

The team is not only technically solid but multi-disciplined with strong representation by gender, ethnicity, country of origin, and background. The team hails from 1010Data, Amazon, Capital One, Etsy, and Klarna. The company’s diversity helps them to be more effective and empathic in its approach to product-building. Being a diverse company didn’t happen by accident. “We’ve been intentional about building with diversity in mind from the very beginning,” said Kumordzie.

How can you use your company’s differences to succeed?

Source: https://www.forbes.com/sites/geristengel/2023/01/11/a-black-female-fintech-founder-leaned-into-her-differences-to-raise-62-million/

Donovan Larsen

Donovan is a columnist and associate editor at the Dark News. He has written on everything from the politics to diversity issues in the workplace.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button