StretchDollar raises a $6M seed, with plans for growth at its new Pittsburgh HQ

Pittsburgh’s fintech sector just received a $6 million boost and the funds could transform how many small businesses provide health benefits.

StretchDollar, an insurance fintech startup with dual headquarters in Pittsburgh and San Francisco, announced a $6 million seed funding round on Tuesday led by Fika Ventures and Oscar Health. The company, now worth an undisclosed amount, says it’ll use the funds to improve its platform and possibly further its Pittsburgh presence after CEO Marshall Darr moved to the city earlier this year. 

“Right now, we’re focusing on expanding our marketing and engineering teams, with more roles likely opening after the new year,” Darr told Technical.ly. While the small company is committed to being remote-first, “I’d love to have more colleagues nearby, so while there’s nothing concrete, an office in Pittsburgh is definitely a possibility,” he said.  

Launched September 2023, StretchDollar offers small businesses a platform to contribute pre-tax funding directly to employee-owned health plan premiums. Just last month, the company grew its customer base by 25% and is on track to end 2024 with over 200 small businesses using the platform, according to Darr. 

The whopping $6 million raise demonstrates the rise of the platform, too. In 2023, the median seed round raise was just $1 million and climbed slightly to $1.3 million in the first half of 2024, according to startup data website Crunchbase.

“We’re growing rapidly because there’s a gap in the market,” Darr said.

The decision to make Pittsburgh one of StretchDollar’s homes poises it for growth — but was originally a personal decision, Darr said. His wife accepted a physician position at healthcare provider UPMC and they moved to the region from Philly in May, which is when the company’s presence in Pittsburgh officially began. 

The fintech market in Pittsburgh is both diverse and dynamic, including major multi-billion-dollar institutions like PNC and BNY Mellon, as well as growing local startups like payment services Affirm and Pineapple Payments. The industry plays a significant role in the local economy, supporting over 60,000 jobs, according to the Pittsburgh Regional Alliance.  

New state and federal insurance laws open up a market opportunity

For the past two years, only 39% of the 5 million US small businesses with fewer than 10 employees have offered health benefits, a significant drop from 49% just two years ago, according to the independent health policy organization KFF. 

Among the small businesses that do offer health benefits, the rising cost of group plans can create an unsustainable financial burden. So, some businesses are exploring alternatives like providing employees with funds to purchase their own individual health insurance. This is where a startup like StretchDollar steps in. 

StretchDollar leverages a relatively new IRS rule that formed Individual Coverage Health Reimbursement Arrangements. This new rule allows employers to use pre-tax dollars to cover employee healthcare expenses. StretchDollar is also a licensed insurance broker, allowing it to match employees with insurance policies. 

“Small business owners didn’t start their companies to manage health benefits,” Darr said. “I’ve yet to meet a small business owner who enjoys picking which hospitals their employees can go to, or which medications they’ll have access to.” 

Darr credits some of StretchDollar’s success in Pennsylvania to Pennie, the commonwealth’s official health insurance marketplace. 

Established under the federal Patient Protection and Affordable Care Act, Pennie allows eligible Pennsylvania residents to purchase private health insurance coverage at federally subsidized rates. The popularity of the service indicates a strong customer base in the area, according to Darr. 

Some of the nation’s largest individual health insurance carriers have also noticed StretchDollar’s market opportunity, like investor Oscar Health, the fifth-largest health insurer in the nation by market share.

“Many businesses, especially those with less than 50 employees, do not have the resources to weather the skyrocketing costs of employer-sponsored plans,” said Mark Bertolini, CEO of Oscar Health, in a recent press release. “The individual market fills the gap: employers have an efficient way for employees to purchase health insurance and employees choose the plans that best fit their needs.”

The funds build on StretchDollar’s previous pre-seed funding raise of $1.8 million last fall and will go towards expanding the startup’s self-service platform, among other updates, according to Darr. 

“With new partnerships and product enhancements on the horizon,” Darr said, “2025 is shaping up to be a transformative year for StretchDollar.”