Entrepreneur Sheri Atwood announced Monday that she has raised $4.1 million to market and expand SupportPay, a mobile app that automates the child-support payment process, in the three short months since she relocated the Silicon Valley startup to Sacramento.
Atwood already had garnered roughly $3 million in seed capital before she began her campaign for SupportPay’s first significant round of financing from venture capital firms, known as the Series A round. The lead investor was Fenway Summer Ventures of Bethesda, Md., but SupportPay also elicited funding from Folsom-based Moneta Ventures and Chicago’s Continental Advisors LLC.
Moneta’s managing director, Lokesh Sikaria, told me SupportPay was one of several appealing investment opportunities, but it stood out because it brought jobs to the Sacramento region. Atwood noted that the company already has added three employees to the team of nine who moved to Sacramento and that the latest cash infusion will allow her to add eight full-time employees and four college interns. Job descriptions already are posted at supportpay.com.
Sikaria said: “They have a very strong business-to-consumer model. They have really good marketing … to attract consumers to this platform. The number of users had increased significantly for them.”
Atwood, 38, came up with the idea for SupportPay after going through a divorce of her own at age 26. She said: “You get a bill for everything in life, but you don’t get a bill for child support. … I decided five years ago to quit my very lucrative corporate job to pursue this and see if I could actually come up with a solution since there was nothing out there. I started that in 2011. For the first year, I taught myself how to code. I built the first product myself.”
Roughly 55 million parents pay $230 billion in support payments annually in the United States alone, Atwood said, so there’s a huge potential for SupportPay to be the platform of choice for individual consumers now and perhaps for government agencies in the future. Thirty percent of those divorced parents have their payments managed by state systems because they receive some form of public assistance, and the other 70 percent have to remember to pay on their own.
“The states are collecting about $29 billion every year in child support,” Atwood said, “but ... you have these other 39 million parents who are exchanging $200 billion every year in child support and child expense, and they have no solution whatsoever.”
In addition, she said, roughly 85 percent of state child-support systems are 10 years or older and it costs roughly $6 billion a year to update or maintain these systems. Atwood and her investors are betting that, at some point, states will be looking for a more cost-effective solution and SupportPay will be well-positioned. The consumer software costs the paying parent at least $9.99 a month, but the other parent can use a free version of the software with fewer functions.