Austin startup Sana Benefits raises $20.8M to continue growth

Austin-based Sana Benefits, which provides self-funded health insurance to small businesses, has raised $20.8 million to expand its business.

The round was led by Austin-based Gigafund. Additional investors included Trust Ventures and mark vc.

Founded in 2017, Sana Benefits provides health care and wellness benefits through self-funded health insurance plans, typically working with businesses that have between 250 or fewer employees.

With self-funded insurance plans, a business or self-employed person takes on the costs and risks of paying for health care. Unlike traditional insurance plans that require a premium paid to an insurer, which is then responsible for paying for health care services, self-funded plans typically involve setting up a special trust fund that earmarks money to pay the claims.

Sana Benefits said the funding will help expand the company's services and allow for growth into additional markets. The company currently serves businesses in Texas and Kentucky. Its goal is to expand across the United States.

Will Young, Sana Benefits' CEO, and co-founder Nathan Hackley came up with the idea for the company while working at a payroll and benefits firm, where they said they observed that small businesses often paid high prices for low-quality health care benefits.

"There's two systems for employer benefits in the United States -- the ecosystem that small businesses get access to and there's the ecosystem large businesses have access to," Young said.

Young said the company's network of vendors helps reduce waste, while still offering a quality health-care experience. The company's partnerships include Beam Dental, Plushcare, Calm and Classpass.

"We're taking all these innovative vendor partners and claims management strategies and science strategies available and packaging them up so small businesses get the access best in class stuff that previously only available for those large companies. We're bringing stuff down market," Young said.

The company currently has about 80 employees, up from about 40 at the beginning of 2020. Young said the company expects to add to its headcount following the new funding round.

The funding round is the second this week for a Central Texas health insurance startup. On Wednesday, Austin-based Decent said it raised $10 million for growth.

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