Not every business can afford to offer employees a retirement savings plan. Icon Savings Plan, now armed with a $3.2 million seed round, is poised to close that gap.
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The San Francisco-based portable retirement savings plan company aims to simplify retirement benefits for employers by offering a no-cost alternative to 401(k) plans.
Laurie Rowley, founder and CEO of Icon, told Crunchbase News that this was the first venture raise for the 2-year-old company, and some of the new investment will be used to hire engineering talent. Icon Savings has 10 employees and wants to bring on five more by the end of the year.
“We are a technology company, so the opportunity to have that funding support is critical,” Rowley said. “We need a huge capital investment to build something in a highly regulated industry. ‘Build fast and break things’ doesn’t work here. To be able to work within the $29 trillion retirement industry, you need a big investment to get opened and running.”
What you should know
In 2019, The Aspen Institute reported that nearly six in 10 Americans did not have a retirement account, while 55 million lacked access to an employer-sponsored retirement savings plan.
“This is a gnarly problem that has existed for a long time,” Rowley said. “Fewer employers are offering them because of the costs associated and the fiduciary risks.”
With Icon Savings, employers can set up a plan for free in minutes, while any employee—full-time, part-time, independent contractors and self-employed—pays a fixed fee of $4 per month. It works like a 401(k) plan with pre-tax payroll contributions, but removes the cost, plan administration, fiduciary responsibility and regulatory burden for employers. When employees leave, they can take their retirement account with them.
In addition, Icon Savings is an adviser, so rather than having to pick your own funds as you would with a traditional 401(k), the company tailors a portfolio to its clients using behavioral finance to understand their psychological and emotional drivers for saving.
What investors are saying
Blaisdell said in a written statement that he focuses his investments on entrepreneurs who are using technology to provide financial products and services to underserved populations.
“Having focused on shortfalls in the retirement industry for almost two decades, including co-founding and leading the nonprofit National Association of Retirement Plan Participants, Laurie simply won’t stop in her efforts to provide simple, inexpensive, portable retirement savings options for every employee in the workforce, and at Icon she is building the team to deliver on that promise,” he said.
Meanwhile, Heidi Patel of Rethink Impact said her firm is always looking for tools that support the modern workplace, “… we see a huge opportunity to improve the financial security of an entire generation while growing a significant business,” she said in a written statement.
Next steps for Icon Savings
Rowley said the company has been in beta testing and will do a larger roll out of its platform in the fall. It is focusing on working with channel partners and the retirement savings ecosystem, especially small employers who want to offer a no-cost plan for their employees.
“We want every working American to have access to a retirement plan because everyone deserves to have financial stability,” she added. “We will first drive coverage amongst groups that have not had access to retirement plans before.”
Who else is raising?
We’ve covered other companies that are making strides in the same area. In March, we reported on Human Interest, a retirement plan provider for SMBs, closing a $40 million Series C round just months after raising a $15.4 million Series B. And then three years ago, we took an in-depth look at apps helping younger workers save.
Photo of Icon Savings Plan CEO Laurie Rowley and technology courtesy of Icon Savings Plan
Blogroll illustration: Li-Anne Dias