BBVA’s $250 million fintech fund is backing a startup offering a ‘cafeteria-style menu’ for health insurance
By Oscar Williams-Grut for Business Insider
Propel, the $250 million fintech venture capital company set up by Spanish bank BBVA, is set to announce the investment at Money2020 in Las Vegas on Tuesday.
It’s Propel’s second investment into an “InsurTech” company — the name given to companies trying to bring technology to insurance in much the same way as FinTech has tried to with finance. It’s first was Hippo, which does home insurance.
Jay Reinemann, managing partner at Proper Ventures, says: “Insurance has been one of the latest hot areas, it’s been that way for at least a year.
“There’s a tremendous amount of investment going on at the moment in everything you can think of. We’ve got one in our portfolio called Hippo that does home insurance but we’ve seen everything. Pet insurance, baggage insurance, home warranty, life, auto.”
Propel was spun out of Spanish bank BBVA in February of this year, with a remit to invest in next-generation finance companies. The VC firm’s sole backer is BBVA and it has $250 million funding, with $150 million devoted solely to the US. It makes it one of the biggest fintech-focused funds in the world. (You can read BI’s interview with BBVA CEO Carlos Torres Vila on the bank’s digital strategy here.)
Reinemann says health insurance is one of the biggest areas that could benefit from investment because it’s “a major problem for a lot of people in the US” and “for employers it’s a very large cost of doing their business and the cost of that is going up dramatically every year.”
Hixme, set up in 2013 according to founder Dan Peate’s LinkedIn page, helps employers in the US offer more personalised health insurance to staff. Reinemann says: “What they’re doing is sort of a cafeteria style menu with the 5,000 health care options on there.
“They try to match someone to the best record possible, versus what most American employers do which is take two or three generic plans and offer them to all employees regardless of individual needs.
“Because they have to accommodate such a broad range of people and conditions often the pricing is expensive because the health insurance providers have to plan in the risk of some very unhealthy people. The healthy person, you’re unfortunately paying for your colleague who doesn’t have the same health as you do.”
He adds: “By you picking a plan more tailored to you, you often times find that it’s more affordable at the same time. You’re paying for your own risk and you’re not paying for the risk of all the others.”
The investment takes the total raised by Hixme to $24.6 million, according to Crunchbase. Existing investors Kleiner, Perkins, Caufield and Byers (KPCB) also took part in the “Series B” funding round, as did Transamerica Ventures and Rosemark Capital.
Reinemann says: “Hixme is a really interesting and really complicated business — it’s not your usual Silicon Valley, venture capital-backed company.”
First appeared at BI