Gravie Lands $179M Raise
Minneapolis-based startup Gravie this week said it has raised a $179 million equity investment on its quest to build a health plan “worthy of consumer love.”
Just don’t call it a health insurance company.
Launched in 2013 by health industry veteran Abir Sen, Gravie bills itself as an “employer health benefits company.” That essentially means the company functions as a third-party administrator for certain health insurance benefits. Gravie doesn’t have a network of providers of its own, so it “rents” networks from big health insurers like Aetna and Cigna.
And though Gravie is not legally a health insurer, it still does offer a health plan of its own known as “Comfort.” That plan leverages Gravie’s existing relationships with those large insurers.
With the $179 million investment in hand, Gravie aims to expand Comfort’s scale and reach. Chief brand officer Jeff Smokler said the funds will enable the company to add new features to Comfort and scale the plan appropriately. That includes bringing more employees on board. Smokler estimates adding about 75 to 100 new employees this year. Today, Gravie employs about 285 full-time employees.
“This funding will go toward scaling of our operations so we can better meet the growing needs of our members,” Smokler said in a Wednesday interview. “And that list of members is growing rapidly.”
New York City-based private equity firm General Atlantic led Gravie’s most recent raise. Prior investors FirstMark Capital and AXA Venture Partners also chipped in.
To be sure, the health insurance business can be a fraught one. Consider the dramatic rise and fall of Minneapolis-based Bright Health Group and other health insurance startups like Oscar and Clover. Bright, which hit the public market with a share price of $17.25 in 2021, is seeing shares traded at just 24 cents today.
Smokler is confident that Gravie is operating a more sustainable path, though. The company’s aim, he said, is “smart growth.”
“We don’t want to grow for the sake of growing,” Smokler said. “We do not view an increase in revenue as a sign of our success. Certainly, that’s one element, but it cannot be the only one. The market, over the last several years, has rewarded revenue growth, and in turn, has found that revenue growth without the business model to support the business is not very valuable.”
Smokler noted that the Comfort members generally don’t have to pay copays on the most common medical services.
In total, Gravie has now raised more than $300 million. That includes $75 million in a Series E raise announced last year.