Fintech Startup Helps Families Keep Track Of Food Stamps And Other Government Benefits, Raises $50 Million In Series B Round Led By Nyca Partners

There’s no shortage of fintech startups tackling business loans, mortgages, and student and consumer debt, but Brooklyn-based Propel is focusing on financial services for low income families and it just raised $50 million to keep growing.

Propel is building financial tech for this often-neglected group through Providers, a mobile app that allows users to track their food stamps, government benefits and cash balances without having to call a 1-800 number or consult a government website. Currently, one-fourth of the over 20 million American households receiving SNAP benefits use the app to keep tabs on their finances, with over $30 billion in food stamp benefits managed through Providers each year.

Propel started when CEO and founder Jimmy Chen left a big-shot product manager job at Facebook in 2014 to launch his own startup through a Blue Ridge Labs fellowship later that year, with a vision to bring dignity and ease to the experience of receiving and using benefits, specifically food stamps. The mission is personal for Chen who remembers what it was like to grow up in a household that struggled with food insecurity.

“People in tech solve the problems that they understand,” says Chen. “There is a stigma attached to the phrase ‘food stamps’ countrywide. I think one of the reasons is because it makes you feel different. You’re paying with a different thing that doesn’t have the respect that you would get from paying with a shiny credit card.”

Propel raised $50 million in a Series B round led by Nyca Partners, joined by other investors including JPMorgan Chase, Salesforce Ventures and Andreessen Horowitz. This round’s capital injection brings the startup’s total funding to $80 million since its Series A in 2018.

Since the app is free for users, Propel’s business model relies heavily on third party companies that pay for space on the app to promote offerings such as insurance coupons, affordable utilities, grocery discounts, healthcare programs and job postings. Over 50 different companies pay Propel to promote their content. Two of its biggest clients are Assurance Wireless (which provides free smart phones and phone plans) and Internet Essentials by Comcast (which promotes discounted home broadband).

“If you look at financial services for poor people, in many cases, they’re a rip off,” says Hans Morris, managing partner at Nyca Partners. “Propel shows that it doesn’t have to be like that, but you have to be very good at avoiding people who are going to use the card fraudulently, at managing all your costs, but also at creating very good experiences. And it takes really good software to do that.”

Propel’s newest product is the Providers Card, a free debit card managed on the Providers app specifically designed to maximize government benefits, including disability benefits and child tax credits, by letting users know when to expect their next deposit to arrive and removing overdraft fees and minimum account balance requirements. Most of the Series B funding will go towards further developing and expanding this debit card service, which provides another source of income for the start up through interchange fees.

“We are striving to build a unique kind of business that’s centered around a social mission, but that is not offering lower financial returns,” says Chen. “I think that’s the most sustainable way to build something that will create a deep, lasting social impact with a strong business model behind it that allows us to keep doing that at scale.”

Although Propel is unique in its business model, there are other apps that help SNAP benefit recipients check their balances, such as ebtEDGE, a product developed by financial services giant FIS.