Fringe CEO and co-founder Jordan Peace in the company’s Scott’s Addition office. (BizSense file)
Fringe, a local tech startup that offers a fringe benefits marketplace for employee perks, recently closed on a $6 million capital raise.
CEO and co-founder Jordan Peace said the funds will keep the 6-year-old company running as it fine-tunes its software and operations as part of a pivot into partnerships with larger benefits providers, which started a couple years ago and is being pursued to achieve profitability and scale.
“We got a big check and didn’t go out and make hires or deploy a lot more,” Peace said. “This is a runway and an opportunity to make profitability.”
Fringe is underway on a project to embed into larger employer-facing companies, which would offer Fringe’s services through their own software products. In 2022, Fringe kicked off partnerships with benefits provider Alight and payroll company ADP, and is continuing to deepen its relationships with those companies.
Peace said that integrating with larger companies allows Fringe to tap into their bigger customer base and expand its user base more quickly than it would be able to alone. He said that between ADP and Alight, Fringe is being introduced to 50 million people.
“Our partnership strategy is such that, as much as humanly possible, we want to partner with the industry leaders that have a client base and add value there. That will allow us to capture more of the market,” Peace said.
Fringe is sold as an add-on to ADP’s Workforce Now software, and Fringe powers Alight’s Wellbeing Marketplace product. Peace said that in addition to working with those firms, Fringe is exploring similar arrangements with other companies.
“More and more partners are finding reasons to tap into Fringe. That might be because they want us to be their LSA (lifestyle spending account) marketplace or their awards marketplace,” Peace said.
Peace said the approach is an attempt to evolve amid shifts in the industry. He said that after a period of rapid growth in the benefits and payroll space, human resource directors tapped to oversee their companies’ offerings have become fatigued by managing multiple vendors. They’re now more keen on the idea of fewer programs.
“In 2019 to 2022, there was a lot of investment and a lot of startups popped up,” he said. “HR just wants to have one thing or maybe two, instead of 17. There’s a desire for less contractors and vendors.”
Fringe’s latest fundraising round was led by Ron Clarke, who is CEO of Atlanta-based payment software CorPay. Other participants in the round, which closed in September, were Origin Ventures, Sovereign’s Capital and the Felton Group.
There were nine total participants in the equity round, per an SEC filing.
Headquartered at 1717 Summit Ave. in Scott’s Addition, Fringe also continues to offer its own employee benefits marketplace. Customers pay to allow their employees access to personalized packages that can feature perks ranging from access to streaming services to food delivery.
Fringe’s customer base consists of 300 companies, among them delivery company Shipt, education company Chegg and car-sharing firm Turo. The marketplace currently features 150 vendors, a number Peace said Fringe has settled on as a sweet spot for the service.
“Some are mainstays and others come and go based on their performance with our user base,” Peace said.
Fringe currently has about 40 employees, half of them based locally. The company had a team twice as large two years ago, when it secured a $17 million capital raise with plans to potentially double its headcount. Peace declined to comment on the downsizing.
Peace said the company planned to add five people as part of the most recent raise.