Photographer: Andrew Harrer/Bloomberg

Collective Health Seeks Funding at $1 Billion Valuation

  • Goldman Sachs is helping startup raise about $100 million
  • VCs backed record number of insurance startups last year

Collective Health Inc. is trying to raise money from strategic and financial investors in a round that would value the do-it-yourself health insurance startup at $1 billion, according to people familiar with the situation.

Goldman Sachs Group Inc. is helping the San Francisco-based firm raise another $100 million or so, according to the people, who asked not to be identified talking about private funding efforts. Collective Health has raised more than $100 million so far, with the most recent infusion coming from Alphabet Inc.’s GV, Founders Fund and others in late 2015. A company spokeswoman declined to comment.

The push comes as investors continue betting tech startups will disrupt the multibillion-dollar insurance sector through more efficient underwriting and new practices like crowdsourcing and on-demand coverage, which lets users pay for insurance only when they need it. Investors backed a record 174 insurance startups last year, an increase of 40 percent from 2015 and 85 percent from 2014, according to research firm CB Insights.

Founded in 2013, Collective Health acts as a carrier for companies choosing to manage their own employees’ health insurance coverage. Instead of working through a large insurer like Aetna Inc. or Kaiser Permanente, the startup administers medical, pharmacy, dental and vision claims on a single platform on behalf of its customers. 

Competing against hundreds of third-party insurance administrators in the U.S., Collective Health aims to streamline and digitize a process that is still largely fragmented and offline. Collective clients, which pay $35 to $50 a month per employee depending on the services, include Activision Blizzard Inc., Zendesk Inc., EBay Inc. and Palantir Technologies Inc.

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