Key facts
- Thatch raised $108 million in funding from existing investors, including The General Partnership, Index Ventures, General Catalyst, and Andreessen Horowitz.
- The company's valuation reached $1 billion following the latest funding round.
- Thatch's annual recurring revenue grew approximately sevenfold.
- Employer healthcare costs are projected to increase by over 8% in 2027, the largest rise since 2003.
- Thatch utilizes an Individual Coverage Health Reimbursement Arrangement (ICHRA) model, rebranded as CHOICE, to allow employers to fund employees' individual insurance plans.
- Employees can use pre-tax funds on Thatch's marketplace to select health, dental, and vision plans, with AI-driven recommendations for optimal choices.
Thatch, a health benefits platform aimed at reducing healthcare costs for employers and expanding plan options for employees, has successfully raised $108 million in a funding round that values the company at $1 billion. The investment was led by existing investors, including The General Partnership, Index Ventures, General Catalyst, and Andreessen Horowitz.
This latest funding comes 17 months after Thatch secured $40 million in a Series B round, which valued the company at $410 million. According to co-founder and CEO Chris Ellis, Thatch has experienced substantial growth, with its annual recurring revenue increasing approximately sevenfold.
The company's expansion is fueled by two primary market trends: the continuous surge in employer healthcare costs, with projections indicating an over 8% increase in 2027, and a growing employee demand for access to newer treatments, such as GLP-1 drugs, which are often not covered by conventional health plans.
Thatch facilitates cost management for employers through its Individual Coverage Health Reimbursement Arrangement (ICHRA) model, known as CHOICE. This regulatory framework, established in 2020, allows companies to provide employees with funds to purchase their own individual insurance plans rather than enrolling them in a single, company-wide plan. Employers set a fixed health budget for each worker, who can then select from a variety of health, dental, and vision plans on Thatch's marketplace. The platform also uses AI to suggest the most suitable plan for each employee's needs. Employees can use any remaining funds for other eligible health expenses, such as GLP-1 medications or health-tracking devices.
Ellis stated that this model benefits both employers and employees by fostering competition among insurers for better service and claim approval rates, while also allowing employers to maintain coverage levels at potentially lower costs without annual renegotiations with carriers. Thatch operates in a competitive landscape with other startups like Take Command, Remodel Health, and Zorro, all leveraging the ICHRA regulation.