Thatch, a fast-growing startup working to modernize how employers provide health insurance, has raised $40 million in Series B funding. The round was led by Index Ventures and included backing from heavyweights like Andreessen Horowitz (a16z), General Catalyst, and ADP Ventures. With this latest investment, the San Francisco-based company has now raised a total of $84.5 million since launching in late 2021.
While Thatch didn’t disclose its post-Series B valuation. Co-founder Adam Stevenson shared that it’s now roughly three times higher than the Series A round, which closed in February 2024 with $38 million led by General Catalyst.
At its core, Thatch health insurance solutions help employers adopt a more flexible benefits model using Individual Coverage Health Reimbursement Arrangements (ICHRAs). Unlike traditional HRAs that only cover out-of-pocket costs like prescriptions and dental work. ICHRAs allow employers to fund individual medical insurance premiums as well.
As CEO Chris Ellis explains it, the model gives employees true freedom. “Imagine giving each employee $1,000 monthly. One person might spend $800 on a Kaiser HMO plan and use the rest on therapy. While another could apply the full amount toward a different PPO plan,” he said. Under the old HRA system, paying for insurance this way wasn’t allowed.
Thatch hosts a marketplace that allows employees to choose their own health, dental, and vision plans. The platform also offers a debit card so users can spend any leftover funds on medical expenses. If an employee isn’t satisfied with their insurance provider, they can switch — a major shift from the one-size-fits-all employer model.
The company says nearly half of its users have leftover funds, averaging about $250 per month. These extra funds can then be applied to things insurance may not cover — providing more control and flexibility to employees.
One reason for the buzz around ICHRA is how new the regulation still is. Approved in 2020, it allows businesses to tailor benefit offerings by employee type. Such as hours worked or location — something Stevenson believes opens the door to major innovation.
“It doesn’t make sense that your employer chooses your healthcare,” Stevenson said. “With ICHRA, companies offer tax-free money and let employees decide what works best for them.”
To help employers adopt this system more easily, Thatch has partnered with QuickBooks. This integration lets businesses set up ICHRA plans directly within their accounting platform. A similar feature with ADP is also in the pipeline.
While the company didn’t reveal revenue figures, Stevenson noted that Thatch has onboarded over 1,000 businesses in just 18 months, with revenue growing 8x year over year. Clients include Dave’s Hot Chicken, Jersey Mike’s, Ferry Health, Fragment.dev, and PeopleTech Partners.
Though rooted in healthcare, Thatch’s real innovation may lie in fintech. The founders realized early on that successfully managing ICHRAs involved more than picking insurance. It required handling budgets, payments, reimbursements, and compliance. To build the right infrastructure, they hired talent from companies like Stripe, Rippling, and Ramp.
Ellis brings a background in cancer research at MIT and experience in healthcare software, while Stevenson spent time at Humana and later led engineering teams at Stripe. The team recently brought on Gary Daniels, former CEO of UnitedHealthcare Pacific Northwest, as chief growth officer — a move that underscores Thatch’s ambition to disrupt employer-based healthcare.
Investor confidence is high. Index Ventures partner Jahanvi Sardana compared choosing health insurance today to “buying a house without knowing the price or details.” She believes Thatch is doing more than fixing a broken system — it’s rebuilding it entirely.
“Thatch makes benefits feel like a true marketplace — one that’s transparent, personalized, and built around choice,” Sardana said. “They’re solving not just a benefits problem, but a payments problem. And that shift doesn’t happen by accident.”
With 72 employees as of March, Thatch is moving fast. As demand grows for flexible, employee-first health coverage, the startup appears well-positioned to lead the charge — and reshape the way businesses think about health insurance.
