Minneapolis-based Bright Health continues to be an investment magnet. On Thursday morning, the company announced it has secured $200 million in its latest financing round. The company, which is working to build a new health insurance plan with national reach, has now raised a jaw-dropping $440 million in equity financing since its launch in early 2016.
Minnesota pales in comparison to Silicon Valley and New York for startups raising venture capital investments, but Bright Health is in a class by itself. A veteran of Twin Cities venture capital firms, Michael Gorman, said he can’t recall a local company – in any industry – raising capital on the scale that Bright Health has done in less than three years.
“I cannot recall a [Minnesota] company that has raised this total sum in this time frame…I think it’s a reflection of a fantastic team [and] the scale of the market that they’re pursing,” said Gorman. “It’s extraordinary.”
Gorman is managing director for Eden Prairie-based Split Rock Partners, a venture capital firm that now manages more than $1 billion in investments.
Bright Health’s trio of co-founders and leaders bring deep health care experience to the fast-growing startup. CEO Bob Sheehy was previously CEO of UnitedHealthcare. President Kyle Rolfing co-founded two successful local health care startups: Definity Health and RedBrick Health. Chief medical officer Tom Valdivia began his career as a doctor and later worked at Definity Health with Rolfing.
“With our recently announced expansion, we will triple our geographic footprint in 2019,” Sheehy said in a statement. “We are just getting started.”
The company’s model is to partner with a single health care provider that offers a strong presence in a market that Bright Health enters. The so-called “narrow network” model is designed to offer lower premiums, a tradeoff for subscribers who have a smaller range of doctors and clinics in the network. Bright Health is focused on selling individual insurance plans; it does not offer group health insurance to companies.
For 2019, Bright Health will offer coverage in Colorado, Arizona, Alabama, Tennessee, Ohio and New York City. The company currently has 225 employees.
Bright Health’s Series C financing round was oversubscribed: the company was originally seeking about $150 million. The financing round drew two new investors: New York-based Declaration Partners and Palo Alto, California-based Meritech Capital Partners. Eight existing investors were all part of the financing round.
Bright Health was one of 25 companies that landed on Forbes’ Next Billion-Dollar Startups list for 2017. According to Forbes, the selected startups are “companies with a strong shot at reaching a valuation of $1 billion or more.”
Earlier this year, Twin Cities Business took an in-depth look at Bright Health and its business.
At the time, Sheehy said, “Health care is a $3.3 trillion industry—and nobody’s really happy with it. The long-term issues that we have in health care are basically caused by the status quo.”