Benny, a platform that helps employees at companies like Salesforce and Microsoft afford their employee stock purchase plans (ESPPs), secured $1 million in pre-seed funding and plans to use the money for customer acquisition, product development and recruiting efforts, according to a company press release.
Madison-based startup Benny, founded in 2021 and previously known as Rooted Lending Inc., received the funding from venture capital firm Matchstick Ventures. They also received $20,000 from Techstars, a startup accelerator program Benny participated in, according to CEO and co-founder Andy Kalmon.
Matchstick Ventures, which has its headquarters in Minnesota and Colorado, is also an investor in Milwaukee’s education startup Fiveable.
Andy Kalmon and Benny co-founder Alok Jain were introduced to Matchstick Ventures through NVNG Investment Advisors LLC, a Wisconsin venture capital fund of funds firm that invested in Matchstick Ventures, NVNG managing director Grady Buchanan said.
Benny lends employees the cash needed to purchase ESPPs. These are lucrative opportunities early professionals often can’t afford especially when dealing with student loan debt, Kalmon said.
“The problem is a majority of employees don’t actually have the money they need to max these benefits out,” Kalmon said. “These awesome wealth-building opportunities are out of reach.”
ESPPs typically allow employees to purchase company stock at about a 15% discount, Kalmon said. But the company makes these purchases with monthly payroll deductions that are hard to afford when 61% of the U.S. population is living paycheck to paycheck according to a February LendingClub.com report, Kalmon said.
Benny’s business plan is centered around taking a portion of an employee’s ESPP earnings as a fee for the service.
The company is also focused on the employer side by partnering directly with companies, which Kalmon said can help them support their employees’ financial well-being.
“We see ourselves being a tool in their tool belt to help employee retention,” Kalmon said. “With a partnership with Benny, employers now have the opportunity to increase (ESPP) participation and also increase inclusivity.”
By partnering with companies, Benny can offer a streamlined pre-approval process for its ESPP support by verifying that an employee works with a company. This access allows them to provide credit at an advantageous rate by knowing an employee can repay them with their salary.
Benny currently employs three people and plans to hire two more with the new funding, including one in growth development and a senior software engineer to help add features to its product offerings. While its product is only web-based now, the company sees an app in its future, Kalmon said.
Benny has on average earned each of its users about $2,500 with customers coming from employees who work at Salesforce, T-Mobile, Microsoft, Labcorp and Zendesk, Kalmon said.
