Thatch, a platform that aims to lower healthcare costs for employers while expanding plan choices for workers, has raised $108 million. This new funding round, from existing investors such as The General Partnership, Index Ventures, General Catalyst, and Andreessen Horowitz, values the company at $1 billion.
This valuation marks a significant increase from the $410 million valuation Thatch achieved 17 months ago during its $40 million Series B fundraise. Co-founder and CEO Chris Ellis stated that Thatch's annual recurring revenue grew approximately seven times.
The company's growth is attributed to surging employer healthcare costs, with 2027 expenses projected to rise over 8%, and employees' increasing desire for access to new treatments like GLP-1 drugs. Thatch addresses these issues by offering an individual plan marketplace through an ICHRA, now known as CHOICE. This model, established by federal regulation in 2020, allows companies to fund employees' individual insurance plans instead of a single company-wide plan.
Under CHOICE, employers set a fixed health budget for each worker, who can then use these pre-tax funds to select from various health, dental, and vision plans on Thatch's marketplace. Thatch employs AI to recommend suitable health plans for employees' specific needs. Chris Ellis claims this arrangement benefits both employers and workers by creating competition among insurers and offering employers a more efficient way to provide coverage.