Jeff Schneble knows that most people don’t hear the term 401(k) and get excited — but he does. For the CEO of Human Interest, it’s about the opportunity to give more people access to a retirement savings and investing plan. His startup builds retirement plans catered to small and medium-sized businesses left behind by outsized and complicated traditional plans, leaving their employees without the tax advantage that comes with investing directly from their paychecks. “What we are really talking about is the last 20 to 30 years of someone’s life,” Schneble tells Forbes. “The two outcomes are: if they save adequately, they can spend the last 20 to 30 years of their lives doing stuff they’ve always wanted to do, if they don’t save enough, then you are in a really tough spot.”
Many of the small businesses that don’t offer a 401(k) plan aren’t doing so because they don’t want to, Schneble says. It’s because the process is too laborious and lengthy. That’s exactly the experience of Human Interest’s founder, Roger Lee. Years earlier, Lee’s prior company, adtech startup Thunder, was growing quickly. He looked into adding the benefit before realizing how difficult the process was. Knowing he couldn’t be the only one with this problem, he launched Human Interest to create a better model. Schneble got involved at the company’s Series A round in 2018, investing as a partner with Wing VC. “After looking at thousands of businesses, I had never seen anything like it,” Schneble says. “Once you see it, you can’t unsee it.” He joined as CEO in 2019 and the company continues to see strong traction. The startup is now announcing its second round of funding in six months after exceeding its own growth goals.
The San Francisco-based startup raised a $200 million Series D round at a $1 billion valuation six months after its $105 million Series C in January. This round was led by the TPG’s Rise Fund and SoftBank and included NewView Capital, Wing VC, Crosslink Capital and Slow Ventures, among others. Schneble says the startup hadn’t originally planned on raising another round of funding so soon but it had already exceeded the revenue they wanted to have to take on more capital. What’s more, TPG’s Rise Fund had reached out earlier in the year about investing as promoting financial health is one of the pillars of the mission-driven fund. John Flynn, a partner at TPG tells Forbes that they’d been waiting for an opportunity to invest in the largely untapped 401(k) market. “The need here is clearly huge,” Flynn says. “The historical problem has been that the systems for 401(k)s are complicated and highly regulated and there is not a lot of innovation.”
Human Interest tries to differentiate its approach by removing the potential roadblocks from the process. The company sells 401(k) programs as a package to employers for a flat rate, so companies don’t have to work through a potentially lengthy, and expensive, process with a broker. The startup is also linked to payroll providers and handles onboarding as well. For each client’s employees, they just opt in or out. “It’s so much simpler than the other products out there,” Schneble says. “Even though it’s better than the other stuff out there, it could still be much better. What we really are aiming for is a frictionless utility where every company just has this and it runs in the background.”
While originally aimed at small businesses that didn’t have a 401(k) offering, Human Interest is attracting larger organizations and companies with existing plans looking to transfer to its platform. The startup wouldn’t disclose specific metrics but Schneble says its revenue is in the “tens of millions” and anticipates crossing $100 million in revenue within 24 months. Currently, Human Interest has more than 100,000 users and aims to IPO within the next few years, once it hits more than $200 million in revenue. “The end goal is to really see if we can make a meaningful dent in the retirement crisis,” Schneble says. “We have around 100,000 users and so we have a long way to go. It’s a multi-decade journey.”