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Forward Funded, a startup in Eastern Foundry’s acceleration program, helps people save money for items by creating a digital envelope system, said founder Brendan Snow.
“We have a website that makes it really easy for people to save up for something in our e-commerce store,” Snow said.
The goal of Forward Funded is to help people save for items instead of using credit and ultimately ending up in debt if they can’t pay when the bill arrives, he said.
The company, which is in its pre-launch phase, is a Walmart affiliate, meaning that all items in the e-commerce store can be found at Walmart.com. Essentially, customers will go to Forward Funded and select items that they want to purchase. When they get to checkout, instead of buying it right away, they have the choice to save money in the digital envelope.
The digital envelope is based off of the envelope system, where people would divide their paychecks into different envelopes in order to make sure they had enough money to pay bills or buy items, Snow said.
With Forward Funded, people are able to store money in the digital envelope based off a payment plan of four months or six weeks, with the option to set up a custom plan. Forward Funded then draws money from the user’s checking account to the digital envelope every weeks to make sure they have enough to buy the item by the time the plan is done.
Users have the option to change plans or cancel them at any time. The website will keep users updated with availability and price of the objects they have saved up in their envelope.
“So we’re giving people the option of bringing the price down and saving for items,” Snow said.
While the website won’t launch for another few months, Forward Funded may be used to help people plan for their holiday shopping next year.
“You can do all of your shopping early,” Snow said. “And you can get everything you want for your family — and even some aspirational items — without going into debt or needing incredible discipline.”
Beyond helping people save up for items instead of relying on borrowed credit, the company also aims to help reduce shopping cart abandonment.
Shopping cart abandonment is the idea that people will shop online for items, but once they get to the checkout they end up not buying the items, Snow said.
There are a couple reasons for why people abandon their carts, including price, lack of free shipping and a long checkout process, he said. Forward Funded tackles the price angle.
“We can help reduce shopping cart abandonment based on sticker shock,” he said.
By reducing shopping cart abandonment, Forward Funded can make companies money, Snow said, adding that while there are no firm numbers, shopping cart abandonment costs companies in the United States tens of billions of dollars annually.
To help with shopping cart abandonment for multiple companies, Snow said his goal is to make Forward Funded a payment option for online shopping, without making people go through the website.
For now the company is focusing on launching the website and then an app, Snow said. He doesn’t have a firm date on its launch due to the different components required to make a online payment systems, but he said he hopes to have it out in the next few months.
The company currently works out of Eastern Foundry, a startup incubator that focuses on military services and government contracting. Snow said the incubator has been helpful in providing resources and advice. Founder Geoff Orazem was one of the people they turned to for help with the concept of shopping cart abandonment, he added.
The connection with Eastern Foundry also helps the startup reach out to a type of user — service members.
“We’re particularly thinking this might be a good tool for service members and their families,” Snow said, adding that military personnel tend to be more conservative spenders.