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LA-based Sidecar Health’s low-cost, cash-pay health insurance service is now valued at $1 billion

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Meet Sidecar Health, the newest member of the tech industry’s billion dollar healthcare startup club.

The valuation comes thanks to $125 million in new funding that the company will use to expand its new model for health insurance. Sidecar Health’s insurance plans give consumers the ability to pay directly for care — often at steep discounts to the prices that patients would be charged through traditional insurance plans.

A typical Sidecar Health plan costs $240 per-member, per-month and its flexibility has made it a popular choice for the nation’s 20 million to 30 million uninsured individuals, according to chief executive officer Patrick Quigley.

The core of Sidecar’s plan is an ability to offer its policy holders the ability to pay directly for their medical care — and shop around to find the best provider using pricing information that the company provides through its mobile app.

Sidecar’s app provides real-time, geo-located information on the costs of any number of medical procedures, consultations, or drugs — and allows its users to shop at the places that offer them the best deal — in some cases the company will even pay money back if a price-savvy healthcare shopper finds a better deal.

If this all sounds kind of dystopian and nightmarish — well, welcome to the world of American healthcare!

In an ideal world, low-cost medical care would be a right, not a privilege and a baseline level of healthcare access would be available to everyone — including an ability to pay a set price for drugs, consultations and treatment. But if you live in America, bargain hunting for care may be the best bet to curb skyrocketing healthcare costs — at least for now.

While Sidecar pitches its service for everyone, the average age of the company’s current patient population is 33 years-old, Quigley said.  “It’s typically people that earn more than $45,000 a year and less than $75,000,” said Quigley of the company’s demographics.

The way it works is that Sidecar issues its insured members what’s basically a debit card that they use to pay for care, prescriptions, and consultations directly. The money comes from Sidecar’s claims accounts and is paid directly to doctors. By avoiding the middleman (traditional insurance companies), Sidecar can reduce overhead for care providers who like to get paid directly and will offer discounts in exchange for receiving cash in hand.

“It is 40% cheaper than the traditional commercial insurance companies would pay,” said Quigley.

Sidecar covers around 170,000 medical conditions and procedures, according to Quigley — including things from horse therapy (it’s a thing) for anxiety relief to heart transplants and chemotherapy, Quigley said.

Sidecar is currently available in 16 states and hopes to expand to most of the country on the back of its latest round of funding.

And while the company is working with uninsured patient populations now, it’s hoping to also expand its footprint with government-backed healthcare plans and into employer-sponsored health insurance as well.

It’s still early days for the service, which has only been around through two open enrollment periods for would-be plan members to sign up. And while the company doesn’t disclose its membership figures, Quigley said it would end the year above 30,000 members.

“It’s still super early,” Quigley said. 

Despite the stage of the business, investors are convinced that the business model has an opportunity to transform health insurance in the US. 

“The extraordinary level of transparency Sidecar Health brings to the marketplace has the  potential to fundamentally change how millions of Americans shop for healthcare,” said Molly  Bonakdarpour, a partner at the Drive Capital, which provided early backing for the company. “We think Sidecar Health’s team of consumer,  technology and healthcare veterans is well positioned to capitalize on the large healthcare  insurtech opportunity.” 

For the latest round, Drive Capital was joined by new investors including BOND, Tiger Global and Menlo Ventures, according to a statement.

Sidecar Health will use the investment to expand its geographic footprint, grow its team and  invest in new insurance products that build on its success in the uninsured market. The first of  these will be an ACA or “Obamacare” offering for 2022, followed by a product for the self funded employer market. 

“We believe we can take $1 trillion in waste out of the U.S. healthcare system,” Quigley said. 

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Tim Hortons marks two years in China with Tencent investment

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Tim Hortons, the Canadian coffee and doughnut giant, has raised a new round of funding for its Chinese venture. The investment is led by Sequoia China with participation from Tencent, its digital partner in China, and Eastern Bell Capital. The round comes two years after Tim Hortons made its foray into China’s booming coffee industry.

Tim Hortons didn’t disclose the amount of its latest fundraise but noted in a social media post that the proceeds will be used for opening more stores, building its digital infrastructure, brand presence, and more.

Tencent, the Chinese social media and entertainment behemoth, first backed the 57-year-old Canadian coffee chain last May. At the time the tie-up was seen as Tencent’s move to counter archrival Alibaba’s alliance with Starbucks to deliver coffee and help the American coffee titan go digital in China.

Tim Horton’s collaboration with the WeChat parent is in a similar vein. It has so far accumulated three million members through its WeChat mini program, a type of lightweight app that runs within the instant messenger. To appeal to young Chinese consumers, Tim Hortons opened an esports-themed cafe with Tencent, China’s biggest gaming company.

Two years into operating in China, Tim Hortons says it has reached storefront-level profitability with a footprint of 150 locations across 10 major cities. It plans to add more than 200 locations in 2021 and reach 1,500 stores nationwide in the next few years.

The dramatic rise and fall of coffee delivery startup Luckin brought the prospects of China’s coffee market to the forefront. Despite the investment frenzy around Luckin and other coffee businesses, coffee drinking still has a relatively low penetration in China compared to countries like the United States and Germany. On the other hand, coffee consumption is growing at a much faster rate of 15% in China, well above the global average of 2%, and is projected to reach 1 trillion yuan ($150 million) in 2025, according to a 2020 report by Dongxing Securities.

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Bessemer Venture Partners closes on $3.3 billion across two funds

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Another major VC firm has closed two major rounds, underscoring the long-term confidence investors continue to have for backing privately-held companies in the tech sector.

Early-stage VC firm Bessemer Venture Partners announced Thursday the close of two new funds totaling $3.3 billion that it will be using both to back early-stage startups as well as growth rounds for more mature companies.

The Redwood City-based firm closed BVP XI with $2.475 billion and BVP Century II with $825 million in total commitments.

With BVP XI, it plans to focus on early-stage companies spanning across enterprise, consumer, healthcare, and frontier technologies. 

Its Century II fund is aimed at backing growth-stage companies that Bessemer believes “will define the next century,” and will include both follow-on rounds for existing portfolio companies or investments in new ones.

BVP XI marks Bessemer’s largest fund in its 110-year history. In October 2018, the firm brought in $1.85 billion for its tenth flagship VC fund. This latest fund is its fifth consecutive billion-dollar fund, based on PitchBook data. 

Despite being founded more than 100 years ago, Bessemer didn’t actually enter the venture business until 1965. It’s known for its investments in LinkedIn, Blue Apron and many others, with a current portfolio that includes PagerDuty, Shippo, Electric and DocuSign. Exits include Twitch and Shopify, among many others.

With more money than ever before available for backing startups, the challenge now for VCs is to see how and if they can find (and invest in) whatever will define the next generation of tech. 

“As venture capitalists, we pay too much attention to pattern recognition and matching when in reality, the biggest opportunities exist where those patterns break,” the firm wrote in a blog post today. “Our job is to make perceptive bets on the future, especially those that others will dismiss and ridicule. We are fundamental optimists and strong believers in the power of innovation; our life’s work is putting our reputation, time, and money to help entrepreneurs realize a different future. They’re the ones pioneering something entirely new and obscure – a technology, a business model, a category.

In addition to announcing the new funds, Bessemer also revealed today that it’s brought on five new partners including Jeff Blackburn, who joins after a 22-year career at Amazon, alongside the promotion of existing investors Mary D’Onofrio, Mike Droesch, Tess Hatch, and Andrew Hedin.

Most recently at Amazon, Blackburn served as senior vice president of worldwide business development where he oversaw dozens of Amazon’s minority investments and more than 100 acquisitions across all business lines – including retail, Kindle, Echo, Alexa, FireTV, advertising, music, streaming audio & video, and Amazon Web Services.  

“Having been part of Amazon for more than two decades, I’m excited to begin a new chapter helping customer-focused founders build breakthrough companies,” said Blackburn in a written statement.  “I’ve known the Bessemer team for many years and have long admired their strategic vision and success backing early-stage ventures.” 

With the latest changes, Bessemer now has 21 partners and over 45 investors, advisors, and platform “team members” located in Silicon Valley, San Francisco, Seattle, New York, Boston, London, Tel Aviv, Bangalore, and Beijing. 

“At Bessemer, there’s no corner office or consensus; every partner has the choice, independently, to pen a check. This kind of accountability and autonomy means a founder is teaming up with a partner and board director who thoroughly understands your business and can respond quickly and decisively,” the firm’s blog post read.

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Daily Crunch: Twitter announces ‘Super Follow’ subscriptions

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Twitter reveals its move into paid subscriptions, Australia passes its media bargaining law and Coinbase files its S-1. This is your Daily Crunch for February 25, 2021.

The big story: Twitter announces ‘Super Follow’ subscriptions

Twitter announced its first paid product at an investor event today, showing off screenshots of a feature that will allow users to subscribe to their favorite creators in exchange for things like exclusive content, subscriber-only newsletters and a supporter badge.

The company also announced a feature called Communities, which could compete with Facebook Groups and enable Super Follow networks to interact, plus a Safety Mode for auto-blocking and muting abusive accounts. On top of all that, Twitter said it plans to double revenue by 2023.

Not announced: launch dates for any of these features.

The tech giants

After Facebook’s news flex, Australia passes bargaining code for platforms and publishers — This requires platform giants like Facebook and Google to negotiate to remunerate local news publishers for their content.

New Facebook ad campaign extols the benefits of personalized ads — The sentiments are similar to a campaign that Facebook launched last year in opposition to Apple’s upcoming App Tracking Transparency feature.

Startups, funding and venture capital

Sergey Brin’s airship aims to use world’s biggest mobile hydrogen fuel cell — The Google co-founder’s secretive airship company LTA Research and Exploration is planning to power a huge disaster relief airship with an equally record-breaking hydrogen fuel cell.

Coinbase files to go public in a key listing for the cryptocurrency category — Coinbase’s financials show a company that grew rapidly from 2019 to 2020 while also crossing the threshold into unadjusted profitability.

Boosted by the pandemic, meeting transcription service Otter.ai raises $50M — With convenient timing, Otter.ai added Zoom integration back in April 2020.

Advice and analysis from Extra Crunch

DigitalOcean’s IPO filing shows a two-class cloud market — The company intends to list on the New York Stock Exchange under the ticker symbol “DOCN.”

Pilot CEO Waseem Daher tears down his company’s $60M Series C pitch deck — For founders aiming to entice investors, the pitch deck remains the best way to communicate their startup’s progress and potential.

Five takeaways from Coinbase’s S-1 — We dig into Coinbase’s user numbers, its asset mix, its growing subscription incomes, its competitive landscape and who owns what in the company.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

Paramount+ will cost $4.99 per month with ads — The new streaming service launches on March 4.

Register for TC Sessions: Justice for a conversation on diversity, equity and inclusion in the startup world — This is just one week away!

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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