Ittavi Raises $2.6M To Take The Sting Out of Child Support

App developers are dangling thousands of new options before us in our spare time—should we learn a new language before that big trip, join a neighborhood network and share intel about yard sales and lost dogs, or design fabulous outfits by combining the best items from luxury fashion lines?

Sheri Atwood is just one of those many innovators competing to attract users and keep them coming back. But you’d think she might have an edge. Her online offering, SupportPay, may not be as fun as playing Angry Birds, but she sees it as a financial necessity for many people. SupportPay is a record-keeping site for divorced parents, who need to keep meticulous tallies of their child-rearing expenses and child support payments. The consequences of spotty bookkeeping can be severe—from huge unreimbursed costs to court actions for unpaid back support.

But Atwood, just like other entrepreneurs, had to learn what discouraged people from making use of her service, and what drew them in. After founding her company, Santa Clara, CA-based Ittavi, in 2011 and operating SupportPay for about two years as CEO, she concluded that she needed to learn even more from her customers.

To that end, Ittavi suspended monthly subscription fees for SupportPay starting in September, to attract a larger customer base and keep mining it for feedback. Ittavi has just completed a total $2.6 million seed funding round, which will pay for improvements to its record-keeping site based on lessons already learned and new insights to come. The first phase of the seed round in May yielded $1.1 million from Tim Draper’s angel investment fund, Draper Associates, other funds, and wealthy indviduals. T5 Capital Partners led the extended round for another $1.5 million, which was announced today.

Many factors can prevent SupportPay users from taking full advantage of the service, such as technical obstacles and the crowded schedules of busy single parents, Atwood has found. But the biggest hurdle is that every aspect of Atwood’s business moves through an emotional minefield. Parents who split—sometimes bitterly—still have to cooperate on child-rearing and money issues.

“It’s striking how important the emotional part of this is to the entire process,” Atwood says.

Early on, Atwood (pictured above) learned that she needed to skirt the animosity between the exes so she could increase customer sign-ups. Initially, the first parent to register on SupportPay would invite the child’s other parent to join. That resulted in a success rate of only 10 percent.

“The last thing that second parent wants to see in their inbox is something from their ex-spouse,” Atwood says. Now the invitation e-mail comes directly from SupportPay—a move that increased sign-ups to 60 percent, she says. The e-mail explains how the site can help both parents maintain a fair split of costs and avoid clashes that can harm children.

SupportPay works best when both parents participate, though just one parent can also use it. The application keeps track of the basic monthly child support amount paid to the custodial parent, as well as extra expenses—such as the child’s medical care and school fees—that the parents may be required to share. Both parents can maintain records of the amounts they paid and the purchases they made on the child’s behalf. SupportPay sends reminders when child support is due.

Atwood found that ex-spouses don’t like to send checks to each other—not only because a check reveals the account number, but also because former husbands and wives know each other well enough to guess passwords or the answers to security questions on private accounts. SupportPay now allows the parents to make payments through PayPal. Ittavi is also developing other options, such as direct payment from one parent’s bank to the other, funneled through SupportPay. “The other parent won’t see their account information,” Atwood says.

Another future option is a debit card that is used only for the child’s expenses, Atwood says. Transactions on the card would be automatically logged on SupportPay, and the parent would only need to add the receipts to the record. E-mailed receipts can be imported into the application; the parent can scan a paper receipt or take a picture of it with a smartphone.

The emotional nature of shared child support arrangements also caused a change … Next Page »

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