Thatch Reaches Unicorn Status With $108M Raise
Thatch, a platform that lowers healthcare costs for employers while expanding plan choices for workers, has raised $108 million at a $1 billion valuation. Existing investors The General Partnership, Index Ventures, General Catalyst, and Andreessen Horowitz all participated in the round.
The new fundraise comes 17 months after Thatch raised a $40 million Series B at a $410 million valuation, according to PitchBook β a remarkable leap for a company that isn't, at its core, an AI startup.
Co-founder and CEO Chris Ellis told TechCrunch that Thatch grew its annual recurring revenue roughly sevenfold over that period. Ellis co-founded the company in 2021 with former Stripe engineering executive Adam Stevenson.
Two Forces Driving Growth
Two major forces are fueling the startup's expansion.
First, employer healthcare costs keep surging. Industry projections put 2027 expenses up more than 8% β the largest increase since 2003, according to Mercer. At the same time, employees are increasingly eager to access newer treatments like GLP-1 drugs (weight-loss and diabetes medications such as Ozempic and Wegovy), which traditional health plans rarely cover.
How the ICHRA Model Works
Thatch helps employers keep healthcare costs manageable by offering an individual plan marketplace through what's known as an ICHRA (Individual Coverage Health Reimbursement Arrangement) β a model created by federal regulation in 2020 that lets companies fund employees' own individual insurance plans instead of enrolling everyone in one company-wide plan. The arrangement was recently rebranded as CHOICE.
Under ICHRAs, employers no longer have to negotiate traditional healthcare agreements with individual insurance carriers like Anthem or United Healthcare. Instead, companies set a fixed health budget for each worker, who can then use those pre-tax funds to choose among dozens of health, dental, and vision plans on Thatch's marketplace.
Thatch uses AI to recommend the optimal health plan for each employee's specific needs. Those needing extensive care can supplement their allowance out of pocket for comprehensive coverage. Healthier workers, meanwhile, can opt for lower-cost plans and apply leftover funds via a Thatch debit card toward other eligible health expenses such as GLP-1s or an Oura Ring.
A "Win-Win" for Employers and Workers
Ellis claims the arrangement benefits both sides.
"If [employees] don't like their insurance, they can switch to another one," he said. "It creates pressure on insurers to compete for better service, denying fewer claims because they want to keep you as a customer."
The benefit to employers, he said, is that they no longer have to renegotiate with carriers annually while still providing the same level of coverage β often at a slightly lower cost.
A Crowded Field
Thatch isn't the only company leveraging the six-year-old regulation to offer employers an alternative to the traditional healthcare benefits model. Competitors include other startups seeking to capture a share of the growing ICHRA market.