Alphabet-backed Medicare Advantage startup Clover Health raises $500M

Despite a number of well-publicized hiccups, venture capitalists are betting another $500 million on health insurance provider Clover Health, TechCrunch has learned.

Despite a number of well-publicized hiccups, venture capitalists are betting another $500 million on health insurance provider Clover Health, TechCrunch has learned.

Existing investor Greenoaks Capital led the round, according to the startup, which confirmed it was closing a new round of capital in the coming weeks. Clover Health has raised a total of $925 million to date, garnering a valuation of $1.2 billion with a $130 million Series D funding in 2017. The company, backed by Alphabet’s venture arm GV, Sequoia Capital, Floodgate, Bracket Capital, First Round Capital and more, declined to disclose its latest valuation.

San Francisco-based Clover Health was founded in 2012 by chief executive officer Vivek Garipalli, the former founder of New Jersey healthcare system CarePoint Health; and Kris Gale, who served as the startup’s chief technology officer until transitioning into an adviser role in December 2017. As part of its latest funding round, the company told TechCrunch it’s promoting Andrew Toy, its chief technology officer since early 2018, to the role of president and CTO. He will also join its board of directors.

Varsha Rao, Airbnb’s former chief operating officer, joined the company in September 2017 as COO.

The tech-enabled health insurer differentiates itself from incumbents by collecting and analyzing health and behavioral data to lower costs and improve medical outcomes for its members. It’s part of a new cohort of heavily funded insurtech startups, including Devoted Health and Bright Health, both of which similarly provide Medicare Advantage plans. Devoted Health, backed by Andreessen Horowitz, raised a $300 million Series B funding round three months ago. Bright Health, for its part, brought in a $200 million Series C in late November at a $950 million valuation. It’s backed by Bessemer Venture Partners, Greycroft, NEA and Redpoint Ventures, among others.

Founded in 2012, Clover Health is years older than its aforementioned counterparts. The business, though supported by top-tier investors and plenty of capital, has struggled in the past to shrink its losses. In 2015, Clover Health posted a net loss of $4.9 million only to increase it 7x the following year to $34.6 million, according to financial documents obtained by Axios. At the time, Clover Health had 20,600 Medicare Advantage members, earning it $184 million in taxpayer revenue. According to reporting from CNBC, the company had initially planned to double its membership base each year but was only able to expand from 20,000 in 2016 to 27,000 in September 2017.

Clover Health currently has 40,000 members in Georgia, New Jersey, Arizona, Pennsylvania, South Carolina, Tennessee and Texas. The business earns roughly $10,000 in revenue per member from the Centers for Medicare and Medicaid Services, or currently about $400 million in annual revenue. As a Medicare Advantage plan, Clover Health makes a majority of its cash from the government.

“Clover’s continuously improving economic fundamentals have allowed us to build sustainably, thoughtfully enter new markets and increase our overall membership by 35 percent during the last 12 months, compared with nationwide growth of 8 percent for Medicare Advantage overall,” the company said in a statement provided to TechCrunch. “This has made Clover one of the fastest growing insurers in [Medicare Advantage] over the past three years. That said, there is much more to accomplish, which is why I am so excited about entering this next phase in our company’s history.”

Brex has partnered with WeWork, AWS and more for its new rewards program

Brex cardholders can now accrue and spend points on AWS, Twilio, SalesForce, WeWork, Instacart and more.

Brex, the corporate card built for startups, unveiled its new rewards program today.

The billion-dollar company, which announced its $125 million Series C three weeks ago, has partnered with Amazon Web Services, WeWork, Instacart, Google Ads, SendGrid, Salesforce Essentials, Twilio, Zendesk, Caviar, HubSpot, Orrick, Snap, Clerky and DoorDash to give entrepreneurs the ability to accrue and spend points on services and products they use regularly.

Brex is lead by a pair of 22-year-old serial entrepreneurs who are well aware of the costs associated with building a startup. They’ve been carefully crafting Brex’s list of partners over the last year and say their cardholders will earn roughly 20 percent more rewards on Brex than from any competitor program.

“We didn’t want it to be something that everyone else was doing so we thought, what’s different about startups compared to traditional small businesses?” Brex co-founder and chief executive officer Henrique Dubugras told TechCrunch. “The biggest difference is where they spend money. Most credit card reward systems are designed for personal spend but startups spend a lot more on business.”

Companies that use Brex exclusively will receive 7x points on rideshare, 3x on restaurants, 3x on travel, 2x on recurring software and 1x on all other expenses with no cap on points earned. Brex carriers still using other corporate cards will receive just 1x points on all expenses.

Most corporate cards offer similar benefits for travel and restaurant expenses, but Brex is in a league of its own with the rideshare benefits its offering and especially with the recurring software (SalesForce, HubSpot, etc.) benefits.

San Francisco-based Brex has raised about $200 million to date from investors including Greenoaks Capital, DST Global and IVP.  At the time of its fundraise, the company told TechCrunch it planned to use its latest capital infusion to build out its rewards program, hire engineers and figure out how to grow the business’s client base beyond only tech startups.

“This is going to allow us to compete even more with Amex, Chase and the big banks,” Dubugras said.

How the 22-year-old founders of Brex built a billion-dollar business in less than 2 years

Henrique Dubugras and Pedro Franceschi, the co-founders of Brex, have raised $125 million at a $1.1 billion valuation just four months after the startup’s public launch.

When Brazilian-born Henrique Dubugras and Pedro Franceschi met at 16 years old, they bonded over a love of coding and mutual frustrations with their strict mothers, who didn’t understand their Mark Zuckerberg-esque ambitions. 

To be fair, their moms’ fear of their hacking habits only escalated after their pre-teen sons received legal notices of patent infringements in the mail. A legal threat from Apple, which Franceschi received after discovering the first jailbreak to the iPhone, is enough to warrant a grounding, at the very least.

Their parents implored them to quit the hacking and stop messing around online.

They didn’t listen.

Today, the now 22-year-olds are announcing a $125 million Series C for their second successful payments business, called Brex, at a $1.1 billion valuation. Greenoaks Capital, DST Global and IVP led the round, which brings their total raised to date to about $200 million.

San Francisco-based Brex provides startup founders access to corporate credit cards without a personal guarantee or deposit. It’s also supported by the likes of PayPal founders Peter Thiel and Max Levchin, the former chief executive officer of Visa Carl Pascarella and a handful of leading venture capital firms. 

Brex is off to one of the most exciting starts we’ve ever seen,” IVP’s Somesh Dash said in a statement.

The financing makes them some of the youngest unicorn founders in history and puts them in a rare class of startups that have galloped into unicorn territory at such a fast clip. Brex was founded in the winter of 2017. It only launched publicly in June 2018.

How’d they do it?

“I’ve had two failed attempts, one successful attempt and one on the way to being a successful attempt,” Brex CEO Dubugras told TechCrunch while reciting a lengthy resume.

At 14, when most of us were worrying about what the first year of high school would bring us, Dubugras was more concerned about what his next business attempt would be. He had already built a successful online game but was forced to shut it down after receiving those patent infringement notices.

Naturally, he used the cash he earned from the game to start a company — an education startup meant to help Brazilian students apply to American schools. He himself was hoping to get into Stanford and had learned quickly how little Brazilian students understood of the U.S. college application process.

In some respects, the company was a success. It garnered 800,000 users but failed to make any money. His small fortune wasn’t enough to scale the business.

“There aren’t a lot of VCs in Brazil that are willing to fund 15-year-olds,” Dubugras told TechCrunch.

Shortly after folding the edtech, he met Franceschi, a Brazilian teen from Rio — Dubugras is from São Paulo — who understood his appetite for innovation and was just as hungry for success. The pair got to talking and because of Franceschi’s interest in payments, they started Pagar.me, the “Stripe of Brazil.”

Pagar.me raised $30 million, amassed a staff of 100 and was processing up to $1.5 billion in transactions when it sold. Finally, they had a real success under their belt. Now it was time to relocate. 

“We wanted to come to Silicon Valley to build stuff because everything here seemed so big and so cool,” Dubugras said.

And come to Silicon Valley they did. In the fall of 2016, the pair enrolled at Stanford. Shortly after that, they entered Y Combinator with big dreams for a virtual reality startup called Beyond. 

“I think three weeks in we gave it up,” Dubugras said. “We realized we aren’t the right founders to start this business.”

He credits Y Combinator with helping him realize what they were good at — payments.

As founders themselves, Dubugras and Franceschi were hyper-aware of a huge problem entrepreneurs face: access to credit. Big banks see small businesses as a risk they aren’t willing to take, so founders are often left at a dead-end. Dubugras and Franceschi not only had a big network of startup entrepreneurs in their Rolodex, but they had the fintech acumen necessary to build a credit card business designed specifically for founders.

So, they scrapped Beyond and in April 2017, Brex was born. The startup picked up momentum quickly, so much so that the pair decided to drop out of Stanford and pursue the business full time.

Simplifying financial access

Brex doesn’t require any kind of personal guarantee or security deposit and it doesn’t use third-party legacy technology; its software platform is built from scratch.

It simplifies a lot of the frustrating parts of corporate expenses by providing companies with a consolidated look at their spending. At the end of each month, for example, a CEO can easily see how much the entire company spent on Uber or Amazon. 

Plus, Brex can give entrepreneurs a credit limit that’s as much as 10 times higher than what they’d receive elsewhere and they can issue cards, virtual cards at least, moments after the online application is complete.

“We have a very similar effect of what Stripe had in the beginning, but much faster because Silicon Valley companies are very good at spending money but making money is harder,” Dubugras explained.

As part of their funding announcement, Brex said it will launch a rewards program built with the needs and spending patterns of founders in mind. Beyond that, they plan to use the capital to hire engineers and figure out how to grow the business’s client base beyond only tech startups.

“We want to dominate corporate credit cards,” Dubugras said. “We want every single company in the world, whenever they do businesses expenses, to do it on a Brex card.”

India’s budget hotel startup OYO raises $1B for international growth

OYO, the India-based startup that operates a network of budget hotels, has pulled in $1 billion in new funding to grow its business in China and expand into other international markets. The majority of the funding — $800 million, to be exact — was led by SoftBank’s Vision Fund with participation from Lightspeed, Sequoia and Greenoaks Capital. OYO […]

OYO, the India-based startup that operates a network of budget hotels, has pulled in $1 billion in new funding to grow its business in China and expand into other international markets.

The majority of the funding — $800 million, to be exact — was led by SoftBank’s Vision Fund with participation from Lightspeed, Sequoia and Greenoaks Capital. OYO said there is also an additional $200 million that has been committed from as-yet-unnamed investors. The deal values the five-year-old company at $5 billion.

Before today, OYO had raised $450 million from investors. Its previous financing was a $250 million round last September which was led by the Vision Fund and included a $10 million follow-on investment from China Lodging.

OYO was started in May 2013 by Thiel Fellow Ritesh Agarwal, who was then aged 19. The company aggregates budget hotels and hostels in India, ensuring that they include minimum standards such as clean sheets, hot showers and free WiFi. It has since branched out into other kinds of lodgings, and verticals that include wedding planning.

Today, OYO claims to have over 10,000 franchised or leased hotels in its network, which it says spans 350 cities across five countries. The company announced an expansion beyond India into China this summer and it is also present Nepal and Malaysia. More recently, it recently entered the UK market this month.

Its plan for China — which OYO interestingly today said is a dual “home market” alongside India — is particularly ambitious, but already the company claims to have reached 87,000 rooms in 171 cities.

China will account for $800 million of this newly-raised capital, OYO said. The remainder will be deployed to bolster its presence in India and supporting growth in its other overseas markets as well moving into other new territories. OYO isn’t saying right now what other overseas expansion plans it has up its sleeve.

“We will continue to explore newer businesses while remaining focused on both organic and inorganic growth. In the last 12 months, we have increased our international footprint to five countries… With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent. We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, global,” Agarwal, the OYO CEO, said in a statement.