Health benefits startup Thatch hits $1B valuation as costs surge

Thatch, a platform that helps employers offer individual health plans to workers, has raised $108 million at a $1 billion valuation from existing investors The General Partnership, Index Ventures, General Catalyst, and Andreessen Horowitz. The round comes 17 months after Thatch raised a $40 million Series B at a $410 million valuation, according to PitchBook — a striking jump for a company that isn’t, at its core, an AI startup.

Co-founder and CEO Chris Ellis told TechCrunch that annual recurring revenue grew about seven times since the Series B. Ellis founded Thatch in 2021 with former Stripe engineering executive Adam Stevenson. Two forces are driving that growth: employer healthcare costs keep rising, with 2027 expenses projected to jump more than 8% — the largest increase since 2003 — while employees increasingly want access to treatments like GLP-1 drugs that traditional health plans rarely cover.

Thatch’s marketplace runs on an ICHRA (Individual Coverage Health Reimbursement Arrangement), a model created by federal regulation in 2020 and recently rebranded as CHOICE, that lets employers fund workers’ individual insurance plans instead of enrolling everyone in one company-wide plan. Employers set a fixed budget per worker, who then chooses among dozens of health, dental, and vision plans on Thatch’s marketplace — AI-recommended based on individual needs — and can spend any leftover pre-tax funds via a Thatch debit card on things like GLP-1s or an Oura Ring.

“If [employees] don’t like their insurance, they can switch to another one,” Ellis said. “It creates pressure on insurers to compete for better service, denying fewer claims because they want to keep you as a customer.” He said employers benefit because they no longer have to renegotiate with carriers annually while often paying slightly less for similar coverage.

Thatch isn’t alone in using the six-year-old regulation: competitors include Take Command, Remodel Health, and Zorro.

Why it matters

The valuation jump for this non-AI healthcare startup — from $410 million to $1 billion in under a year and a half — shows that surging employer health costs, not just AI hype, are still pulling venture money toward companies promising employers a cheaper way to cover workers.