Belong Health raised a $40 million Series A round to double its team and expand its insurance tech to health systems serving vulnerable populations.
New Enterprise Associates, a global venture capital firm headquartered in Chevy Chase, Maryland, led the round. NEA is one of the top VC firms in the world with $7.1 billion raised over the last five years, according to the Venture Capital Journal's annual VCJ 50 list.
Previous investor Maverick Ventures — a subsidiary of San Francisco-based Maverick Capital — also participated.
Belong Health has now raised about $45 million since it launched in March, CEO J. Patrick Foley said.
The Philadelphia-based startup works with regional and local health plans and hospital systems to provide care for vulnerable and special needs populations that are eligible for Medicare and Medicaid plans. Belong Health helps health systems and health plans build insurance products that cover complex needs of those populations.
The funds will be used to double Belong Health’s headcount, with plans to hire clinical and product development staff throughout 2022. About half of the startup’s 26 employees are clinically focused staff. The Series A funding will also be used for sales and marketing and to improve Belong Health’s technology platform.
Foley’s background is in health insurance and health care companies. He spent several years with HealthSpring, which was acquired by Cigna in 2012, along with Missouri value-based care managed services operator Lumeris, ELAP Services and CareATC. Foley was also a senior operating adviser with private equity firm LLR Partners, focusing on health care.
While working in health insurance, Foley found that there weren’t many health plans that had developed an approach to effectively work with Medicare and Medicaid patients.
When it comes to populations with complex medical, social and behavioral health conditions, health care providers need to offer resources through nursing, social workers, behavioral health psychologists and more. Oftentimes insurance companies have “antiquated” legacy technology that make it difficult to keep track of the care teams that see patients on a daily basis, Foley said. Belong Health deploys clinical teams to its clients and offers a technology platform to make care efficient.
“The goal for Belong Health, instead of trying to put up our own brand and go develop a competitive-type offering here, we thought that local communities and these local health plans really deserve a partner who can help them really deploy these innovative care delivery models around what these populations need,” he said. “And then it's also all of the operational insurance capabilities that are needed to develop the product, as well.”
Belong Health’s first client is MVP Health Care, a nonprofit health insurer in New York and Vermont. The contract is set to begin in early 2022, with three products focused on dually eligible Medicare and Medicaid beneficiaries.
The $40 million Series A shows the staggering growth of venture capital rounds in 2021. The average size of a Series A has grown from $6 million to $18 million in the last 10 years, according to Crunchbase.
Belong Health didn’t initially seek to raise $40 million, Foley said. The startup went out with a game plan to get the startup enough of a runway to hire and build out its technology without having to immediately raise more capital. Belong Health executives met with over 50 VC firms over six weeks before selecting NEA, which offered more money after seeing a predictable revenue stream for 2022, he said.
“I guess it enabled the venture firms that we were talking with to be a little bit more aggressive around how they saw our prospects,” Foley said.
Foley declined to share Belong Health’s valuation, but he said the startup was happy with where its valuation landed.
Belong Health plans to expand its partnership with MVP Health Care and to add new clients. The startup is eyeing health insurance companies and health systems in states with more “progressive” managed Medicare and Medicaid implementations, such as New York and California. Foley also sees opportunity in Texas and the Southeast.
“It's more of trying to identify a specific partner like a health plan or a health system that has a real need for this,” he said. “And so those tend to be less geographic decisions and really more of a partner-specific decision.”
