Oscar, a new health insurance company, has closed a $US145 million round of financing.
A source close to the company says the new round brings Oscar’s valuation to $US1.5 billion, making it the latest tech company to join an expanding list of valuable startups known as tech “unicorns.” Unicorns are private tech companies with billion-dollar+ valuations.
Oscar is rumoured to be generating hundreds of millions in annual revenue and it has raised nearly $US300 million from investors to date. It was founded a few years ago but launched publicly in July 2013.
Right now, Oscar has 40,000 customers in New York and New Jersey, the only two states where the service is currently available. That’s up from 15,000 one year ago. Users can buy health insurance coverage from the marketplaces created under the Affordable Care Act. The company uses technology and design to make its statements and services easy for anyone to understand.
Founded in 2013 by entrepreneur and venture capitalist Joshua Kushner, Microsoft’s former director of health care Kevin Nazemi, and former McKinsey & Company computer scientist Mario Schlosser, Oscar rivals established health insurance companies like Aetna and UnitedHealth.
Oscar lets users talk to doctors on the phone for free, and it was the first insurance company to give fitness trackers to its customers to let them get rewards for walking a certain number of steps in a day.
Oscar’s new funding was led by both Peter Thiel and Brian Singerman from Founders Fund. Li Ka-shing of Horizon Ventures, the Wellington Management Company and Goldman Sachs also participated in the new round of funding. Thiel and Singerman are longtime supporters of Oscar, CEO Mario Schlosser says. “They came aboard for the first time in May 2013 when we had just 1,000 members signed up.”
Schlosser says that in New York, its market share is upwards of 12%. “The biggest reason why we now decided to raise a new round of capital is that we think the opportunity we originally saw is even bigger than we realised early on,” Schlosser tells Business Insider. “We started three years ago with the very distinct idea of creating a better user interface for healthcare, and most specifically health insurance.”
Schlosser says his team is 185 people right now, and he expects that number to grow this year. In addition, he says, Oscar is working with regulators in other states to expand Oscar’s coverage with the end goal to get Oscar into as many members’ hands as possible.
Schlosser says Oscar oversees $US200 million in healthcare spending. “We really have been growing about twice as quickly as we thought, and we’ll continue going up from here,” he says. “The rest of the healthcare system is so damn complicated and complex that if you really navigate it on your own you’re sort of out of luck. So we’re your trusted guide to help you through the system, so you can get connected to the right doctors and hospitals.”