Fintech fills a void for divorced parents who co-manage money
Jacklyn Rome’s parents divorced when she was 14. Although they had an amicable split, “money was the number one cause of arguments,” she said. “When you scratch the surface of this issue and talk to more people who have been through a divorce, it’s pretty universal.”
About 45% of marriages end in divorce, according to the Centers for Disease Control and Prevention’s National Center for Health Statistics. Economy is routinely cited as a main reason behind these decisions. Also, discussions about money in relationships can be fraught, and even more so when raw emotions are involved — but parents can have decades ahead of them where they are jointly invested in their children’s expenses.
Roma formed a startup, Onward, which developed an app that takes some of the heat out of this situation. It helps parents who have shared manage their children’s expenses.
There are many budgeting apps for couple and challenger banks for families which helps people manage their money more harmoniously as a unit. The Onward app, which recently announced its Series A, fills a gap somewhere in the middle.
Michelle Spirn, owner of Spirn Family Law in Clayton, Missouri, and vice president of the Missouri chapter of the American Academy of Matrimonial Lawyers, says there’s generally no confusion about which expenses each parent is responsible for; in Missouri, for example, the parenting plan, or custody agreement, requires parents to allocate their children’s covered medical, recreational, and daycare expenses while the parents work, and will often also outline other allocations, such as college expenses.
“The problem for some families is keeping track of which expenses were incurred for which child, collecting receipts and asking for reimbursement,” she said.
Furthermore, a new twist on shared finance, which consulting firm Forrester said in a 2021 report is a big opportunity for financial services companies, but one that isn’t being explored much by established firms beyond joint accounts.
“There is no doubt in my mind, based on our research, that Onward is a valuable service that fills a latent need,” said Peter Wannemacher, principal analyst at Forrester. Some of the biggest opportunities in the sharing economy are relationships between people that are complex or fraught.
“The question will be, is there enough value for people to add it to the list of brands they use for financial services,” he said.
Rome herself, who is Onward’s CEO, doesn’t come from a fintech background — she previously held roles at Uber and meal delivery service Blue Apron — but she has populated her staff with people who have previously worked in fintech, including investment app Acorns, Intuit and PayPal.
“Our app sits at the intersection of fintech and ‘famtech,'” she said. “We’re solving an emotional problem masquerading as a financial problem.”
One parent will usually download Onward and invite the other to join. They can both add expenses and suggest a split – for example 50/50 or 70/30 – and upload a receipt. Each party will receive a notice when the other adds an expense and can either settle immediately or propose a different split. They can click a link in the app to pay the other parent back via Cash App, PayPal, Venmo or Zelle or, in the near future, via in-app ACH transfer.
Roma says she’s been asked why parents don’t use services like Splitwise or Venmo to accomplish the same tasks.
“I’ve talked to hundreds of co-parents and have never been told they’re switching to us from Splitwise,” Roma said, noting that most say they manage expenses via text message or email spreadsheet. “Splitwise is built for relationships that have inherent trust,” such as friends or a group that wants to split expenses on a trip.
In Onward, Roma points out, every change a parent wants to make triggers a notification to the other, which they can accept or reject, and is also logged on an activity feed. Users can export their data, which can be useful if the parents return to court.
Spirn says her firm advises clients to keep careful records of children’s expenses, including dates they were incurred, receipts showing payment and written copies of reimbursement requests.
“Truthfully, this can be a challenging process for parents who are not quite as organized or ‘Type A’ as others,” she said. She has found that many parents use Excel or handwritten charts.
Rome’s team also emphasizes the language and design to dampen tensions.
Instead of using proper names in push notifications, the notification will tell users that the co-parent has settled an expense.
“It comes out of research where people say that reading their ex’s name on the phone was a trigger for them,” Roma said. She focused on more neutral terminology such as “settle up” rather than “pay back” and emphasizes the children’s names in expense descriptions, to reinforce the idea that this is for the children. The name “Onward” is meant to evoke feelings of optimism and to build a new future.
Roma founded and developed Onward at Co-Created, a venture studio based in New York, with support and funding from Citi Ventures, who had an existing relationship with Co-Created. The Onward app was launched in May 2020 as Ensemble and changed to Onward last year because people had trouble spelling Ensemble. Citi Ventures invested in Onward’s seed and Series A rounds; Onward raised $9.7 million in Series A funding from Citi Ventures and other investors in October.
“As diverse family structures and economic dynamics become increasingly common, Onward provides an important tool to prioritize the well-being of healthy and well-adjusted children,” said Luis Valdich, CEO of Citi Ventures. He noted that Citi Ventures rarely invests in seed-stage startups, “so Onward stands out in that we were there since the beginning,” he said.
The app uses Plaid to verify account and routing numbers for ACH payments, and fintech-as-a-service provider Solid to enable ACH payments. Roma chose Solid because it will also be able to help Onward build its next financial products, namely a “co-parent card” that will act as a debit card and share expenses by deducting from each parent’s bank account at the point of sale and then, probably, a savings product that will help parents jointly save for large expenses, for example the child’s braces or summer camp.
The app has nearly 100,000 downloads, and Roma estimates that the number of active users is in the tens of thousands. One method she used to spread the word was to recruit co-parenting influencers. For example, a TikTok influences under the handle @heartmindedmama shared tips in a video for separated parents such as encouraging a positive relationship, communicating respectfully and using Onward to stay organized and avoid fights over money.
“Onward differentiates itself from other general-purpose budgeting and bill-sharing apps by understanding the exact friction points that co-parents experience when sharing expenses on an ongoing basis, and goes beyond simply facilitating the transfer of funds,” said Valdich.