Prism, a three-year old startup, has raised $2 million over multiple rounds to help people pay their bills using a free mobile phone app.
Investors include a number of high-profile individuals, including Seattle angel Rudy Gadre, Qpass founder Chase Franklin and Marchex co-founder John Keister. A handful of Silicon Valley angels also have invested, including Mark Britto, who was previously SVP of worldwide services and sales at Amazon before becoming CEO of Boku, a mobile payments company, where he is now executive chairman.
Tyler Griffin, Prism’s co-founder and CEO, said the Seattle-based company is currently raising up to $400,000 in a new round to give the 12-person company enough capital to test a series of new features focused on monetizing the fee application.
Griffin and his co-founder Steve Gordon first dreamed of starting a company together while at Northwestern University, but didn’t come up with an idea until after graduation. Gordon took a job at Microsoft, where he worked on Hotmail, while Griffin went to JPMorgan, working on mergers and acquisitions in New York. The two reconvened in 2011 to come up with Prism, which now seems funny to the entrepreneurs.
“We started this company because we found bill payments to be a huge pain in the butt — and now that’s all we deal with,” Griffin said, laughing. “It didn’t work out for us, but it works for our customers.”
The way the app works is pretty simple.
Once downloaded, users will be prompted to add bills. To help, Prism makes recommendations based on your location. For instance, Comcast and Seattle City Light are recommendations for cable and utility companies in Seattle. Next, consumers must enter their username and password for their various accounts. Once set up, Prism will send three notifications: When a new bill is discovered; a reminder the day before it’s due; and finally on the day it’s due.
Griffin said the app is designed to help Americans in their 20s and 30s, who on struggle to juggle up to 15 separate bills every month. An average household can waste $400 paying late fees and overdraft annually.
A lot of competing apps are focused on trying to get consumers to save or be more responsible, he said, but “the reality is for most people, they don’t do much good. Most people have trouble making monthly payments…The average person can’t put things on autopay because they don’t know how much money they will have in their account.”
He said Prism is similar to Square, the San Francisco company that helps small businesses accept credit cards using a phone or tablet. Square isn’t trying to replace MasterCard and Visa, and Prism is not trying to replace the bank. “We are sitting on top of them and providing a beautiful user experience, and we are dealing with their pain and complex fee structures,” Griffin said.
Roughly 40,000 users are using Prism every month, and to date have paid a combined $75 million in bills. The app first launched in 2012, and an Android version launched 13 months ago. Versions are also available for Windows Phone, Windows 8 and Kindle Fire. The app receives very high ratings, with users giving it a 4.5 on both Android and Apple.
A lot of the hard work that Prism has done so far is in integrating directly with the various bill collectors. By connecting directly, it does not have to pay an intermediary to send a check or process a credit card fee. Since the app is free to download and use, that has enabled the company to keep costs low. So far, it has added about 5,500 companies.
The next round of funding will go towards adding features that will make the company money. The first two will be enabling customers to pay with a credit card when that is not offered, like when paying your rent. A second feature will let customers secure a line of credit, similar to a cash advance.
While it’s not set in stone, Griffin said they are considering charging a 5 percent transaction fee on credit card payments, and a $15 to $20 fee for borrowing money.
Griffin acknowledges that there are a lot of technology startups today, vying to change the way we manage our personal finances — some of which compete with Prism.
“We are on the vanguard of a big change that’s coming soon. There’s a lot of people doing interesting things. Consumers are going to be surprised how much better their financial lives can be. A lot of companies and founders are doing interesting stuff. It’s an interesting time to watch this space, and a good time to be a consumer.”