As the economy drags through a period of uncertainty, many small businesses might be looking for savings on their health insurance plans.
That's where Austin's Sana Benefits Inc. hopes to gain additional traction with its employer-sponsored health plans. The startup, founded in 2017, says it has already grown its customer base by 200% over the past year, and announced June 15 it has raised millions to accelerate its expansion into new states.
Sana's $60 million series B funding round was led by Austin-based firms Trust Ventures and Gigafund. Several of its earlier investors also joined the series B, including American Family Ventures, Mark vc, Breyer Capital, JAM Fund and Liquid 2 Ventures.
The new money follows a $20 million series A in 2020 led by Gigafund, Trust Ventures and Mark vc, as well as a $20 million extension to that round in 2021 led by Gigafund. Sana has now raised $107 million total. The company declined to share its latest valuation, but Will Young, CEO and co-founder, said via email that the figure has about doubled since its last round of funding.
While Sana has made significant inroads with small- and medium-sized businesses that switch insurance plans, it has also helped many small businesses offer their employees insurance for the first time. Sana says when it opens in a new market, about 40% of its new customers are businesses that had not offered health care coverage previously.
Sana started offering its insurance packages in Texas in 2020. It has since expanded to seven other states, most recently Virginia and Indiana. Earlier this year, it opened its first brick and mortar location, called Sana MD, which offers primary care health services to its members.
Young said the new funding gives the company the ability to keep hiring even as markets get shaky. It expects to boost its headcount from today's 170 to about 200 by the end of 2022 and continue hiring in 2023. The company offers remote-friendly work; about a quarter of its employees live in the Austin area.
The remote-first company has vacated its office at 9501-B Manchaca Road and is now based at Bond Collective, a coworking space in East Austin.
While Sana is not yet profitable, executives believes they can reach that milestone with the new funding round, Young said.
The economic downturn has had an impact but Sana's product is an essential offering for most businesses.
"Mostly it has changed our expectations for the future fundraising climate — we expect it will be harder to raise money in the future than it has been in the past," Young said. "That makes us more conservative about expenses and more inclined to steer towards profitability, all else being equal."
