Health insurance startup Bright Health has closed on $160 million in venture capital as it prepares to expand into new markets and the Medicare Advantage business.
Greenspring Associates led the round, likely the largest in Minnesota history. Greycroft Partners, Redpoint Ventures and Cross Creek Advisors also participated as new investors. Previous backers New Enterprise Associates, Bessemer Venture Partners and Flare Capital Partners also joined in.
Former UnitedHealthcare CEO Bob Sheehy and veteran Minnesota health care entrepreneurs Kyle Rolfing and Tom Valdivia launched Bright Health and raised $80 million in a Series A round of funding last year
Bright Health sells individual health plans to consumers, on exchanges and through brokers. Its strategy is to forge deep partnerships with a sole health system in each state it enters, and attract consumers with apps and other tech tools.
The startup didn’t disclose names of states it plans to enter, but said it will announce 2018 markets within the next six weeks. It’s been posting openings for jobs in Alabama, Arizona and New York. It’s already in the Colorado market.
“Based on the interest we have from leading health systems across the country and the receptivity from members we currently serve in the Colorado market, Bright is primed to scale very quickly over the next few years,” the company said in a statement.
Bright Health’s expansion comes at a time of great uncertainty in the individual health insurance market. Obamacare drove the launch of a fresh crop of insurance startups that drew venture capital backing from investors betting young companies could shake up the business with tech savvy. Many of those startups have struggled to achieve profitability, however, and the House has voted to repeal Obamacare. (The Senate seems to be starting over on a rewrite effort, which means that any replacement could be a long ways off.)
In a statement, NEA General Partner Mohamad Makhzoumi said Bright Health is positioned well to succeed.
“We’re thrilled to continue our partnership with Bright Health to disrupt a complicated industry where consumers are demanding change and leading health systems are hungry to deliver,” he said. “Bright Health has an experienced leadership team with substantial health care, informatics, and consumer expertise, as well as a differentiated model that has it poised for continuing growth. The success of this financing round is a testament to the company’s vision and the market’s confidence in their ability to execute.”
It’s likely not all $160 million will go toward growth efforts. Health insurance startups often put a portion of large venture rounds in reserves.
Date:June 01, 2017