App that draws divorce tiffs to a close

Bloomberg

Sheri Atwood is the rare Silicon Valley entrepreneur whose pitch includes intimate details about her family—namely, how it was broken up. Twice. “My parents had a horrific divorce,” says the 36-year-old former Symantec Corp. executive. “It felt like the only time they communicated was in court—and when it had to do with money.”
Her own divorce years later, and the fact money became a constant refrain in its aftermath, gave her the idea for SupportPay. The app helps parents split the costs of raising children and review expenses productively when they disagree, rather than, say, having it out on the front lawn.
Divorced right after her 12-year-old daughter was born, Atwood recalls being surprised by how even minor money matters could fray dealings with her ex-husband. Her daughter’s school levies fines on parents whose kids aren’t picked up on time—$5 for every five minutes after 6 p.m. and an additional $5 for every tardy minute after 6:15 p.m. While tuition is her responsibility, school pick-ups are his. The cost of too many late arrivals, like other incidentals, could quickly become infuriating, she says.
With SupportPay, parents can upload a receipt, send the ex a bill, and “never have a conversation,” Atwood says. The app is designed to forestall the resentment that can quietly build between divorced parents who might otherwise be on the same page, at least as far as the kids are concerned.
Child-support agreements typically require one parent to pay the other a set amount—often twice a month—for such basics as food, clothing, and shelter. SupportPay can automatically manage those payments through PayPal. Legal agreements usually require parents to split further costs, from extracurricular activities and child care to medical expenses, as they arise. These can create the most conflict: Does little Liam really need a math tutor? Is his soccer summer camp worth $700 a week?
While a judge has final say, the app is designed to prevent such squabbles from going that far. It lets parents dispute expenses before paying them, although they have to provide reasons and propose alternatives. Olivia Haugher, a mother of three who uses SupportPay, says her ex-husband makes use of the dispute function, though the issue “usually does get resolved.” She contends that he objected to a bill for their 17-year-old son’s school trip to Costa Rica. They had agreed to split the cost, but it ended up totaling more than she had calculated. Once she used the app to explain the reasons—her son needed spending money and a stipend for his sponsor family—her ex sent the money.
The app stops such fights from happening near the kids, Haugher said—and ends the frustration when someone forgets their checkbook or misses an e-mail. “It basically has helped us communicate better,” she says. And because she can send receipts and other detailed information through the app, “he gets to see how expensive the kids are.”
When parents don’t pay child support, “it’s usually not about money,” says Ryan Falvey, managing director at the Center for Financial Services Innovation. Last year, the Chicago-based nonprofit named SupportPay winner of a competition among digital services that help low- and middle-income families better manage finances. When it comes to child support, Falvey says parents often just want to know where the money is going, in order to make sure it’s going to their kids. “This might be where technology can solve things in a big way, just by connecting people to information,” he says.
Launched two years ago, SupportPay had 36,000 parent users in January, up from 12,000 in March 2015. It’s currently the only product of Santa Clara, Calif.-based Ittavi Inc., which has nine full-time employees and four contractors. The company, which expects former couples to send $900 million through the platform this year, was started with $3 million in seed money from venture capital firms that include Draper Associates, Salesforce, Aspect Ventures, and Fenway Summer Ventures. It’s currently raising as much as $5 million in series A funding aimed at sustaining the company until it’s profitable, said Atwood, who is chief executive officer.
Use of SupportPay was free until September, when the company started charging. Some 23 percent of users chose to pay for premium versions starting at $120 a year, the company says. Paying that much allows them to dispute an ex’s expenses and store records over the long term. Another $36 a year gets users the “legal” version, which lets them make records available to divorce attorneys or mediators. A “lite” version, which keeps only six months of records, is still free.
Records are crucial if divorced couples end up back in court. Payers of child support must be able to prove they’ve made every required payment, or judges can demand they catch up or even garnish their wages, says Derek Austin, a divorce attorney with Austin & Plate P.C. in San Jose, Calif., who has advised SupportPay.
SupportPay is hoping to become part of the divorce court infrastructure, getting itself included as part of child-support agreements. To that end, the company has built a “family law network” of more than 3,200 divorce attorneys, mediators, judges, and financial advisers, up from about 500 in March. Austin touts the app as a less-harsh alternative to wage garnishment, but one that still ensures the money will arrive on time. “When people have had a relationship and don’t any longer, paying money can be very hard to do,” Austin says. “I use it as a tool to manage relationships.”
For many divorced couples, however, SupportPay is less a way to resolve disputes than a tool to organize lives complicated by a failed marriage. Andrew Williams, a father of four from Modesto, Calif., gets along well with his ex-wife but uses SupportPay to store and organize everything they share, including their divorce agreement and their children’s report cards and school bills. “Now everything is centralized,” he says. “There is no worry about losing a file,” as could have happened when his former spouse’s computer crashed recently.
Atwood says SupportPay is designed so parents can share as much or as little as they want with their exes. One planned enhancement would offer an easier way for parents to save together, connecting financial accounts to SupportPay while sharing only certain details. “How do you save for college together when you don’t like each other?” Atwood asks.
Williams says he plans to remain a SupportPay customer even after July, when his youngest son turns 18 and child-support payments end. He and his ex will still be sharing the cost of the family dogs—a nine-year-old Pug and a five-year-old German Shepherd, both of which live with him. For now, he says, “I’m paying her child support, and she’s paying dog support.”