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Insurance startup Bright Health raises $200M at ~$950M valuation
A flurry of digital-first insurers are betting they can surpass industry incumbents with a little help from technology and a lot of help from venture capitalists.
The latest to land a massive check is Bright Health, a Minneapolis-headquartered provider of affordable individual, family and Medicare Advantage healthcare plans in Alabama, Arizona, Colorado, New York City, Ohio and Tennessee. The company, founded by the former chief executive officer of UnitedHealthcare Bob Sheehy; Kyle Rolfing, the former CEO of UnitedHealth-acquired Definity Health; and Tom Valdivia, another former Definity Health executive, has brought in a $200 million Series C.
The funding values Bright Health at $950 million, according to PitchBook — more than double the $400 million valuation it garnered with its $160 million Series B in June 2017. Sheehy, Bright Health’s CEO, declined to comment on the valuation. New investors Declaration Partners and Meritech Capital participated in the round, with backing from Bessemer Venture Partners, Greycroft, NEA, Redpoint Ventures and others. Bright Health has raised a total of $440 million since early 2016.
VCs have deployed significantly more capital to the insurance technology (insurtech) space in recent years. Startups in the industry, long-known for a serious dearth of innovation, have raked in nearly $3 billion in private capital this year. U.S.-based insurtech startups have raised $2 billion in 2018, a record year for the sector and more than double last year’s total.
Deal count, meanwhile, is swelling. In 2016, there were 72 deals conducted in the space, followed by 86 in 2017 and 94 so far this year, again, according to PitchBook’s data.
Oscar Health, the health insurance provider led by Josh Kushner, is responsible for about 25 percent of the capital invested in U.S. insurtech startups this year. The company has raised a total of $540 million across two notable deals in 2018. The first saw Oscar pulling in $165 million at a $3 billion valuation and the second, announced in August, had Alphabet investing a whopping $375 million. Devoted Health, a Waltham, Mass.-based Medicare Advantage startup, followed up with a massive round of its own. The company nabbed $300 million and announced that it would begin enrolling members to its Medicare Advantage plan in eight Florida counties. Devoted is led by Todd Park, the co-founder of Athenahealth and Castlight Health.
Bright Health co-founders Bob Sheehy, CEO; Tom Valdivia, chief medical officer; and Kyle Rolfing, president
VC’s interest in insurtech isn’t limited to healthcare.
Hippo, which sells home insurance plans at lower premiums, officially launched in 2017 and has brought in $109 million to date. Earlier this month the company announced a $70 million Series C funding round led by Felicis Ventures and Lennar Corporation. Lemonade, which is similarly an insurer focused on homeowners, raised $120 million in a SoftBank-led round late last year. And Root Insurance, an app-based car insurance company founded in 2015, itself raised a $100 million Series D led by Tiger Global Management in August. The financing valued the company at $1 billion.
Together, these companies have raised well over $1 billion this year alone. Why? Because building a health insurance platform is incredibly cash-intensive and particularly difficult given the breadth of incumbents like Aetna or UnitedHealth. Sheehy, considering his 20-year tenure at UnitedHealthcare, may be especially well-positioned to disrupt the industry.
The opportunity here for investors and startups alike is huge; the health insurance market alone is forecasted to be worth more than $1 trillion by 2023. Companies that can leverage technology to create consumer-friendly, efficient and, most importantly, reasonably priced insurance options stand to win big.
As for Bright Health, the company plans to use its $200 million infusion to rapidly expand into new markets, planning to triple its geographic footprint in 2019.
“Bright Health has continued to execute at a fast pace towards our goal of disrupting the old health care model that places insurers at odds with providers,” Sheehy said in a statement. “[Its] current high re-enrollment rate shows that consumers are ready for this improved healthcare experience – especially when it is priced competitively.”
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With $300M in new funding, Devoted Health launches its Medicare Advantage plan in Florida
Devoted Health, a Waltham, Mass.-based insurance startup, has raised a $300 million Series B and is enrolling to its Medicare Advantage plan members in eight Florida counties.
The company, which helps Medicare beneficiaries access care through its network of physicians and tech-enabled healthcare platform, has raised the funds from lead investor Andreessen Horowitz, Premji Invest and Uprising.
The company declined to disclose its valuation.
Devoted’s founders are brothers Todd and Ed Park — the company’s executive chairman and chief executive officer, respectively. Todd co-founded a pair of now publicly traded companies, Athenahealth, a provider of electronic health record systems, and health benefits platform Castlight Health. He also served as the U.S. chief technology officer during the Obama administration. Ed, for his part, was the chief operating officer of Athenahealth until 2016 and a member of Castlight’s board of directors for several years.
Venrock partners Bryan Roberts — Devoted’s founding investor — and Bob Kocher — its chief medical officer — are also part of the company’s founding team.
The Park brothers have tapped Jeremy Delinsky, the former CTO at Wayfair and Athenahealth, as COO; DJ Patil, a former data scientist at the White House, as its head of technology; and Adam Thackery, the former CFO of Universal American, as its chief financial officer.
Its board includes former Health and Human Services Secretary Kathleen Sebelius and former Senate Majority Leader Bill Frist. As part of the latest round, a16z’s Vijay Pande will join its board, too.
The company says it’s committed to treating its customers as if they were members of its employees’ own families. For Patil, the startup’s head of tech, that’s made the entire process of building Devoted a very emotional one.
“I’ve cried a lot at this company,” Patil told TechCrunch. “You meet these seniors and they’ve done everything right. They’ve worked so incredibly hard their entire lives. They’ve given it their all for the American dream. They’ve paid into this model of healthcare and they deserve better.”
Devoted, which previously raised $69 million across two financing rounds in 2017 from Oak HC/FT, Venrock, F-Prime Capital Partners, Maverick Ventures and Obvious Ventures, has begun enrolling to its Medicare Advantage plan seniors located in Broward, Hillsborough, Miami-Dade, Osceola, Palm Beach, Pinellas, Polk and Seminole counties. It will begin providing care January 1, 2019.
Its long-term goal is to offer insurance plans to seniors nationwide.
“We are responsible for these people’s healthcare, so we need to get it right,” Patil said.
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