Food stamps. They're an important part of the origin stories for Alex Parmley and his company.
Phood, which last month won $1 million in the 43North pitch competition, integrates with universities’ card services to connect students’ flex dollar accounts with the gig economy.
Parmley grew up in Athens, Alabama, and was raised by a single mom with three kids. He also grew up selling food stamps to feed his family.
“There wasn’t a lot of money to scrape together after bills,” he said. “We did what we had to do to get by.”
After graduating high school, he crashed on a friend’s couch and would write his friend’s school papers. When others asked Parmley to write their papers in exchange for using their campus cards to get food, his wheels started turning. It dawned on him – this is like college kid food stamps.
He started asking other friends if they had these university cards and figured out the average amount on each card. He did the math and realized it’s a large, untapped market.
“I’ve always had an infatuation with money, finance and digital payments,” he said. “I’m a digital native.”
Phood, founded in 2018 and based in New York City, started providing food delivery services from dining halls, but Parmley realized it was capital intensive, so he focused on the university cards as a payment platform.
From there, he started a neobank, an online bank with no physical locations, in summer 2021. At age 25, he said, he was the youngest African American to start a neobank.
Phood partnered with Discover to issue the university cards and now works with four campuses with about 50,000 students on its platform. Parmley expects to scale to 105,000 students by the beginning of 2023.
The business issues a virtual debit card to students that can be used to buy goods and services from third-party vendors.
“Our success is due to a lot of failure and also a lot of resiliency,” he said.
As one of five 43North contest winners, Phood will move most of its team of seven to Buffalo early next year.
Not including the 43North prize, Phood has raised about $4 million so far. Partners and investors include Techstars, Motivate Ventures, WndrCo, Rarebreed, SideDoor Ventures, UPC Capital, Asymmetry VC, Fresh Technology, SIMULATE, DoorDash, Manifold Group, Qolo, Discover Financial, Gaingels and Sutton Bank.
He expects to grow by working with states to implement the university cards throughout state university systems.
The startup also has 10 people on contract. The goal is to make the 10 contractors full time and hire more than 20 people in the next year in Buffalo.
“What Western New York has shown over the past century is proof that the operational excellence that comes out of Buffalo is very valuable,” Parmley said.
