Thatch Raises $40M to Transform Employer Health Benefits

Thatch, a startup revolutionizing the health insurance experience for both employers and employees, has secured $40 million in a Series B funding round led by Index Ventures. Existing investors like Andreessen Horowitz (a16z), General Catalyst, SemperVirens, PeopleTech Partners, The General Partnership, and new investor ADP Ventures also participated in the funding.

Since its inception in October 2021, Thatch has raised a total of $84.5 million in equity funding. The San Francisco-based startup, founded by Adam Stevenson and Chris Ellis, declined to disclose its new valuation but revealed that it is approximately three times higher than its previous Series A valuation of $38 million. Thatch specializes in helping employers offer Individual Coverage Health Reimbursement Arrangement (ICHRA) to employees, a new insurance option introduced in 2020. Unlike traditional HRAs which cover only out-of-pocket medical expenses, ICHRA allows employers to use the funds to cover individual medical insurance. Thatch operates a marketplace where employees can choose from various health insurance options and provides a debit card for spending remaining balances on healthcare plans, including medical, dental, and vision.

 The startup has already onboarded over a thousand companies and has seen an 8x year-over-year revenue growth, with customers such as Dave’s Hot Chicken, Jersey Mike’s, Fragment.dev, Ferry Health, and Friends of Bonobos. Thatch has integrated its offering with QuickBooks and is working on a similar integration with ADP for easy setup of ICHRA accounts for employees. T

he startup's founders, Chris Ellis and Adam Stevenson, aim to provide businesses with the flexibility to customize health benefits by grouping employees based on factors such as hours worked or geographical location. They envision ICHRA as a solution that allows businesses to give their employees tax-free money to spend on healthcare in the most suitable way. With backgrounds in healthcare and technology, the founders have built a team with expertise in fintech to manage the financial and operational infrastructure necessary for ICHRA.

Thatch has also appointed Gary Daniels, former CEO of UnitedHealthcare’s Pacific Northwest division, as its chief growth officer. Jahanvi Sardana, partner at Index Ventures, emphasized Thatch's potential to transform the benefits, technology, and payments landscape, making health plan selection and payments more user-friendly and transparent. She noted that Thatch's approach represents a fundamental shift towards a better system, making it an obvious choice for employers and employees alike.

Discover more about the funding here.