An Austin insurtech startup just raised money to increase employees’ health care access while decreasing employers’ health care costs.
Sana Benefits announced on Thursday it raised $20.8 million in Series A funding.
The Austin-based healthtech startup provides self-funded health insurance plans for small businesses. It plans to spend the cash on acquiring new customers, with the goal of eventually taking on United Healthcare, Anthem Blue Cross Blue Shield, Aetna, Cigna and Humana — large health insurance companies that CEO and co-founder Will Young calls the “Big Five.”
“Our vision has always been to replace the current broken healthcare system with one that is incentivized to deliver better outcomes at lower costs,” Young said in a statement.
Founded in 2017, Sana claims to save small business customers like Door.com an average of 20 percent on their insurance costs through reference-based pricing, which relies on a third-party source like Medicare to establish the cost of employee care. Unlike traditional carriers that set their own rates, which can be padded with administrative and other overhead costs, Sana said relying on an outside pricing mechanism keeps its rates low. Eliminating the insurance monopoly Sana said exists in many markets will also lower healthcare rates, the company said.
The startup makes money by managing and distributing its healthcare plans and over the past year, it has watched its business grow tenfold. The startup’s platform covers employee health, vision, dental, telemedicine and maternity services, as well as preventative healthcare benefits like ClassPass. The startup said it aims to abolish healthcare network restrictions and out-of-network-fees.
By next year, the company aims to expand beyond its current availability in Texas and Kentucky.
It’s not the only Austin insurtech startup to receive investment recently. In July, Hippo Insurance raised $150 million, with plans to hire 310 individuals at its new Austin office, and, in late June, the AgencyKPI platform for insurance agents raised $5 million.
Sana is currently hiring for a number of roles including a customer success manager and a sales director. Gigafund led the Series A round, with participation from Trust Ventures and mark vc.