Small and medium-sized businesses (SMBs) have for decades struggled with being able to offer their employees health insurance.
Sana, a startup that wants to make offering health insurance plans more accessible to those businesses, has raised $60 million in a Series B funding round.
Trust Ventures and Gigafund co-led the round, which brings the Austin, Texas-based startup’s total raised to $107 million since its 2017 inception. Existing backers include American Family Ventures, mark vc, Breyer Capital, JAM Fund and Liquid 2. The company declined to reveal its valuation, saying only that it had "roughly doubled" since its $20 million Series A extension last October.
Put simply, Sana’s mission is to offer “better and more affordable” health plans to SMBs. It claims to save companies up to 20% compared to their current health insurance.
“Our plans cover everything legacy health insurers do while including free visits to next-generation virtual care services in primary care, mental health, pediatrics and maternity,” said co-founder and CEO Will Young.
Sana offers its plans in eight states, including Arizona, Oklahoma, Texas, Illinois, Ohio and Kentucky. Having recently expanded into Virginia and Indiana, it plans to use its new capital in part to move into new states in coming months.
Its target customers aren’t just small businesses that already offer health insurance plans, but also those that previously could not afford to provide healthcare to employees, according to Young. He estimates that 35-40% of its new customers are such businesses.
Most customers receive 0% increase renewals, which Young says is rare in the industry, and have low co-pays.
Sana has about 20,000 people on its health plans today, and has tripled the number of customers over the past year, he said. They include Bishop Cider, Ben Hogan Golf and BrewBike, among others.
"We are not profitable yet, but plan to get there with this round of funding,” Young told TechCrunch.
The company’s model is unique, in his view, because of its vertically integrated approach. It makes money by charging fees for a variety of services related to selling, underwriting and administering health plans. It also earns revenue on insurance risk.
In January, Sana opened its first physical primary care health center, dubbed Sana MD, for its members in Austin. Concierge care at the center is available to its members on most plans free of charge, according to Young.
Notably, both Trust Ventures and Gigafund have been investors in Sana since the company’s seed round in 2019. The latter has led four separate rounds of investment in the company, because “the team continues to impress…with their phenomenal vision and execution,” said Stephen Oskoui, managing partner of Gigafund, in a written statement.
Salen Churi, founder and general partner at Trust Ventures, believes that Sana’s strengths lie in its ability to leverage “a vast network of providers” and “providing access to cutting-edge digital health and wellness technologies — all at a lower cost to small businesses than legacy health insurance.”
Besides expanding into new markets, Sana plans to use its new capital to hire across its operations, member advocacy, sales and marketing teams. It also plans to open more primary care health centers in additional locations, according to Young.
Presently, remote-first Sana has 170 employees, up from 80 at the start of 2021.
The insurtech sector has had its ups and downs as of late. Publicly traded companies in the space are still struggling while other startups are laying off and still others also raising new capital at unicorn valuations.