Northstar’s Series A: Redefining Financial Wellness
Today, M13 is excited to lead a $7.3 million Series A round in Northstar, a fintech company that enables employers to offer financial wellness as an employee benefit. Founded by Will Peng and Matt Matteson, Northstar offers both automated tools and financial advisors who can help employees understand, utilize, and optimize all of the compensation and benefits they receive from their employer—and aims to use that information to significantly improve employees' long-term financial decision-making and wealth building.
As the COVID-19 crisis has revealed, too many Americans are grappling with the systemic financial issues that go hand in hand with mental health and stress. And with employees no longer working in offices, perks like free snacks and foosball tables aren’t the best way to drive employee engagement and retention in the new world (by the way, they never really were!). It’s time to redefine employment benefits in favor of those that are truly meaningful for employees.
Introducing Financial Wellness as a Benefit
Over the last decade, companies have focused on physical wellness and are now beginning to prioritize mental wellness. We at M13 believe the future of employee retention and engagement will increasingly become centered around financial wellness. During a period of increased financial uncertainty for many, having the ability to thoughtfully plan and partner with an advisor and automated tools is a potentially game-changing benefit for employees.
We see the opportunity for Northstar to transform financial planning into an experience that touches everyone at the most impactful point of their financial journey—right where they earn their salary. This has tangible benefits for both employees and employers:
- For employees, Northstar helps them understand, utilize, and optimize the value of every aspect of compensation that a company offers, well beyond just the paycheck. A total compensation dashboard lays it all out for the employee, with centralized recommendations on how best to leverage compensation and employer benefits, such as equity, health plans and open enrollment, HSA/FSA, total rewards statements, and visual offer letters. Armed with that data, the employee can then work closely with a personal financial advisor to craft a plan that meets their goals. Having that planning support reduces stress and uncertainty, driving performance.
- For employers, companies gain a competitive advantage and HR teams emerge as heroes for providing such actionable clarity and insight into all of their benefit offerings. Northstar helps drive visibility and utilization of benefits the company is already paying for, promoting employee engagement as well as attraction and retention. And the more employees feel empowered and secure from a financial perspective, the more they can focus on doing their best work for the company. When employees clearly recognize the connection in how their compensation and benefits support their life goals, there is a measurable improvement in employee happiness and retention.
Shared Values and Vision
Northstar was inspired by its founders’ own experiences with systemic problems that individuals face when dealing with personal finances. Will graduated with $35K of student debt and paid thousands of dollars in unnecessary interest because he didn't know anyone to ask for advice. Later, as General Partner of Red Swan Ventures—which has investments in Guideline, Even, Oscar, and Coinbase—Will had a front-row seat to how innovations in fintech can help solve these financial issues.
Here’s how Northstar caught the attention of M13 Partners Matt Hoffman and Latif Peracha:
Matt Hoffman: Will and I originally met through the PeopleTech Partners accelerator, and I was impressed with how he and the other Matt had identified the clear number one problem that employees face: constant financial stress and uncertainty, which negatively impacts their performance. By collaborating closely with leading HR leaders and listening closely to the challenges they face in communicating compensation and benefits to employees, Northstar came up with an intuitive solution that combines human advisory work with digital self-serve tools to form a new benefit category for employees—and redefines the power of fully understanding total compensation to support financial planning.
Northstar resonated with me because of my background leading and redefining People teams at revolutionary companies. At DigitalOcean, we scaled the team up several multiples in size over four years, all while achieving both significant revenue growth and industry-leading organizational engagement. DigitalOcean was named the Best Place to Work in NYC and was recognized in publications like Harvard Business Review for our innovative approach to Talent Development. At Return Path, we ranked as the #2 Best Place to Work in the U.S. by Fortune and helped set the bar for a People-First culture. These formative experiences informed my belief in what it takes for cutting-edge tech workforces to attract and retain top talent. Northstar can help today’s best places to work provide even more meaningful benefits.
Most importantly, it has to be said that Will and Matt are good human beings. They’re deeply ethical and principled, which makes all the difference in an industry where both those attributes are so important. They’re the sort of founders you want to work with, building a company you’d want to work for. They care about company culture and values. This matters to M13 as an investor —and it matters even more to potential customers.
Latif Peracha: The heart of M13’s investment thesis is investing in founding teams who are shaping consumer behavior over the next decade, and we identified personal finance as an area of focus. By leading Northstar’s Series A, we’re also expanding the remit of a consumer-focused fund. Specifically, we’re spending more time in the B2B2C channel, and we see much potential in the employer distribution angle as part of this broader definition. You can drive significant consumer value but you have a much more resilient and long-term partner in the employer.
Everyone at M13 is thrilled to support Northstar, and we’re excited to expand Matt Hoffman’s remit as our Head of Talent into a board position with Northstar. It's a natural fit for a firm like ours where our partners come from operating backgrounds and our Propulsion platform has already begun to help Northstar.
M13 gets excited about companies that redefine categories and offer powerful solutions. Northstar has done both extraordinarily well. You rarely see a company at their stage with such a sophisticated approach to product-market fit. The fact that they’d already secured partnerships from companies like Zoom and ServiceTitan (and a few more big names to be announced shortly), which are themselves evolving how we all work, were signals to us to take a deeper look at what they were building.
In Northstar, we’ve found the winning combination of a dream team and an investment that’s consistent with what we’re seeing in future consumer behavior, and we’re proud to lead their Series A.
Learn more about Northstar here.