Kindly Care—a startup that helps clients find, hire and manage at-home caregivers—has raised $5.4 million in a Series A round and is planning to expand to the East Coast for the first time.
The company has also backed away, for the moment, from sharing workers with home care agencies through a platform dubbed Care Exchange.
San Francisco-based Kindly Care was founded in 2015, secured a $3.1 million funding round in 2016, and currently serves five states: Arizona, California, Florida, Nevada and Texas. The company serves people who would prefer to directly hire caregivers rather than work through a private duty home care agency.
“The majority of Americans are hiring [non-medical caregivers] directly and through referrals,” Kindly Care founder and CEO Igor Lebovic told Home Health Care News. “Hopefully, they can interview and background-check them … but sometimes you end up with problems on your hands. Also, how do you handle the paperwork—tax withholding, et cetera? We reduce those pain points.”
Specifically, Kindly Care clients provide some information about themselves to the company, which registers them as W-2 household employers with state and federal authorities and opens needed tax accounts on their behalf. Kindly Care then helps match clients with caregivers who are on the Kindly Care platform, which now numbers more than 100,000 workers, Lebovic said.
Once a caregiver is selected, Kindly Care facilitates an in-person interview and provides the caregiver’s background check and references from former employers. When a client hires a caregiver, Kindly Care runs weekly payroll, provides back-up caregivers in the event of a missed shift, and handles other logistical and administrative issues, such as carrying unemployment insurance. It’s this level of service and vetting that separates Kindly Care from marketplaces such as Craigslist and Care.com, Lebovic said.
The Kindly Care system benefits clients by reducing their burdens and protecting them from certain risks, and by improving retention of caregivers they work with, according to Lebvoic. For caregivers, Kindly Care is generating a pay stub, creating proof of employment that makes it easier for them to lease a car or rent an apartment, which can be tricky when they are employed directly by a family.
The caregiver’s hourly rate is negotiated with the client. Most Kindly Care caregivers are earning about $3 more per hour than industry averages in their markets, according to Lebovic. Kindly Care’s fee is a percentage of the caregiver’s pay rate—25% in most cases, and 20% for live-in care.
The recent funding round was led by Javelin Venture Partners, with other investors including MHS Capital and Jackson Square Ventures.
The plan is for Kindly Care to enter New York and then fill in the states down the East Coast to Florida, with a Midwest expansion also in the works and nationwide coverage the ultimate goal, Lebovic said.
Yet, the majority of the VC funding will go toward covering caregivers background checks—which are a major expense for the company—rather than supporting rapid expansion.
“The round was oversubscribed and we could have taken significantly more money than we did, but we decided that wasn’t what we were looking for,” he said. “We try to be frugal and build the business by growing revenues and providing high-quality care, and the VC money is there for what we know we really need it for, but not as a strategic weapon to brute-force us into an industry.”
Care Exchange on hold
Kindly Care has also been a proponent of caregiver sharing. The idea was that Kindly Care would make its workers available to take positions at private duty agencies, if the agencies also made some of their workers available to clients through the Kindly Care database.
Lebovic is a big believer in the model, given the labor challenges in the industry, including difficulties in finding and hiring high-quality caregivers, and high turnover rates. Yet, Care Exchange was a tough sell to home care agencies, which are used to competing with each other for workers rather than collaborating.
“We contributed hundreds of caregivers into the [Care Exchange] network, but nobody else wanted to contribute theirs,” he said. “So when the pool dried up, we were approached by agencies who said, we’ll pay if you want to contribute caregivers [to us], but that’s a different business. For a small team like ours, it felt like we would take our eye off the core of our business.”
There are some “friendly agencies” in the Bay Area, and Kindly Care has sent them caregivers for free when a need has arisen, Lebovic said. Agencies have also referred people to Kindly Care, if for some reason the agency has not been able to accommodate their needs. He still believes that ultimately, some version of Care Exchange will work, as the industry will have to move away from business as usual.
“There’s going to be all sorts of solutions in the home care market,” he said. “The industry has been strangely monolithic for 45 years, with only two ways of [hiring a caregiver], as W-2 through an agency or 1099 or nothing.”
He believes that the market can and will support a greater profusion of options, given that demand is rising across the board, and there will be clients at different price points and with different needs.
“Hopefully one day, we’ll reach a significant market share, but we’ll never put the agencies out of business, because what they do is different and valuable,” Lebovic said. “People ask, what’s the difference between you and other disruptors like Hometeam and Honor. We’re not disruptors, that’s the most different thing. We’re part of an ecosystem.”
Written by Tim Mullaney