A flurry of digital-first insurers are betting they will surpass business incumbents with slightly assist from expertise and numerous assist from enterprise capitalists.
The most recent to land a large examine is Bright Health, a Minneapolis-headquartered supplier of inexpensive particular person, household and Medicare Benefit healthcare plans in Alabama, Arizona, Colorado, New York Metropolis, Ohio and Tennessee. The corporate, based by the previous chief govt officer of UnitedHealthcare Bob Sheehy; Kyle Rolfing, the previous CEO of UnitedHealth-acquired Definity Health; and Tom Valdivia, one other former Definity Well being govt, has introduced in a $200 million Sequence C.
The funding values Bright Health at $950 million, in keeping with PitchBook — greater than double the $400 million valuation it garnered with its $160 million Series B in June 2017. Sheehy, Shiny Well being’s CEO, declined to touch upon the valuation. New buyers Declaration Companions and Meritech Capital participated within the spherical, with backing from Bessemer Enterprise Companions, Greycroft, NEA, Redpoint Ventures and others. Shiny Well being has raised a complete of $440 million since early 2016.
VCs have deployed considerably extra capital to the insurance coverage expertise (insurtech) house in recent times. Startups within the business, long-known for a critical dearth of innovation, have raked in almost $three billion in personal capital this yr. U.S.-based insurtech startups have raised $2 billion in 2018, a report yr for the sector and greater than double final yr’s complete.
Deal rely, in the meantime, is swelling. In 2016, there have been 72 offers carried out within the house, adopted by 86 in 2017 and 94 up to now this yr, once more, in keeping with PitchBook’s information.
Oscar Health, the medical insurance supplier led by Josh Kushner, is liable for about 25 p.c of the capital invested in U.S. insurtech startups this yr. The corporate has raised a complete of $540 million throughout two notable offers in 2018. The first noticed Oscar pulling in $165 million at a $three billion valuation and the second, introduced in August, had Alphabet investing a whopping $375 million. Devoted Well being, a Waltham, Mass.-based Medicare Benefit startup, adopted up with a large spherical of its personal. The corporate nabbed $300 million and introduced that it could start enrolling members to its Medicare Benefit plan in eight Florida counties. Devoted is led by Todd Park, the co-founder of Athenahealth and Castlight Well being.
VC’s curiosity in insurtech isn’t restricted to healthcare.
Hippo, which sells house insurance policy at decrease premiums, formally launched in 2017 and has introduced in $109 million up to now. Earlier this month the corporate introduced a $70 million Series C funding spherical led by Felicis Ventures and Lennar Company. Lemonade, which is equally an insurer targeted on owners, raised $120 million in a SoftBank-led spherical late final yr. And Root Insurance, an app-based automobile insurance coverage firm based in 2015, itself raised a $100 million Series D led by Tiger World Administration in August. The financing valued the corporate at $1 billion.
Collectively, these corporations have raised nicely over $1 billion this yr alone. Why? As a result of constructing a medical insurance platform is extremely cash-intensive and significantly tough given the breadth of incumbents like Aetna or UnitedHealth. Sheehy, contemplating his 20-year tenure at UnitedHealthcare, could also be particularly well-positioned to disrupt the business.
The chance right here for buyers and startups alike is large; the medical insurance market alone is forecasted to be value greater than $1 trillion by 2023. Firms that may leverage expertise to create consumer-friendly, environment friendly and, most significantly, fairly priced insurance coverage choices stand to win massive.
As for Shiny Well being, the corporate plans to make use of its $200 million infusion to quickly increase into new markets, planning to triple its geographic footprint in 2019.
“Shiny Well being has continued to execute at a quick tempo in the direction of our aim of disrupting the outdated well being care mannequin that locations insurers at odds with suppliers,” Sheehy mentioned in an announcement. “[Its] present excessive re-enrollment fee reveals that buyers are prepared for this improved healthcare expertise – particularly when it’s priced competitively.”