Veer Gidwaney admits that he and his brother were probably a “little bit naïve” about the complexity of the healthcare industry when they started up Maxwell Health in 2012.
Their startup provides Web-based software for buying and managing health insurance plans and other benefits, and runs an online marketplace for other human resources and health-related services as well. The goal: Update HR processes that for many small and medium-sized businesses remain stuck in the 20th century (think paper or outdated software), and make it as easy to manage benefits as it is to use Netflix, Gidwaney says.
There’s a lot of pent-up demand for such technology. But it’s also a hard, competitive sector to break into.
“There’s a pretty big down payment to pay in order to build viable technology in this space,” Gidwaney says. “It’s not trivial to build technology … to integrate with all the players you’ve got to integrate with. It takes time; it takes capital.”
Accessing capital has not been a problem for Maxwell, and today the cash continued to flow into the company’s coffers. Maxwell just closed a $22 million Series C funding round, a little more than a year since it raised $26.4 million from investors. The company’s total venture capital haul now stands at $56.4 million, Gidwaney says.
At this point, Gidwaney thinks Maxwell has reached a sweet spot where it’s still “fast and nimble” like a small tech startup, but it has grown to a size that allows it to be more effective, especially in an entrenched industry like HR services. Maxwell, which has main offices in Boston and New York, employs about 150 people nationwide. That’s more than double the size of its staff in late 2014, when we covered its Series B round.
In this sector, “the expectations are so high that you’ve got to be able to reach a particular scale, which we’ve been able to get to,” Gidwaney says. “It helps us earn a seat at the table. We’ve gotten that now, and as a result we’re able to, I think, do some really neat things.”
Hundreds of thousands of workers use the company’s software, Gidwaney says. Its reach is aided by partnerships with an increasing number of insurance carriers, brokerage firms, and benefits consultants. These partners offer Maxwell products and services to businesses and their employees for free as part of their benefit packages. Maxwell makes money through monthly software-as-a-service agreements with its partners, as well as taking a cut from vendors and carriers when their products are sold through Maxwell’s online marketplace.
Maxwell’s products include a mobile app that workers can use to find all the information they’d need to, say, check into a doctor’s office (like a virtual insurance card), or to find out and show a pharmacist which drugs are covered under their policy.
The company also provides a “concierge service” of on-demand personal online advisors, like registered nurses. During insurance enrollment, they help employees choose between plans, and afterwards, find doctors, schedule appointments, or if necessary look into billing errors. Maxwell also offers a rewards-based program that streams in activity from fitness devices like Fitbit to award points to members for living healthy lifestyles. Companies like Kashable (online loans) and ID Watchdog (identity theft protection) offer their services through Maxwell’s online marketplace.
The new money should help Maxwell get its products to more people, as the company aims to serve 10 million people by 2020, Gidwaney says. He knows Maxwell has a long way to go, but he says he thinks it’s poised to accelerate adoption of its products. “The focus for our business right now is how do we scale efficiently and effectively,” he adds.
Gidwaney declined to share specific hiring projections, but it sounds like serving significantly more customers won’t require continuing the rapid hiring pace of the past year. “We may very well grow our team, but what I’m much more concerned about is how do we build a behemoth of a company that is built to last,” he says.
Neither would Gidwaney share revenue figures nor whether Maxwell is profitable. “But what I can tell you is we have an opportunity to invest ahead of the curve in order to accelerate and build faster than we would if we were purely growing organically. So, that’s what we’re doing.”
Maxwell says the latest investment money comes from new investors GIS Strategic Ventures, an investing arm of The Guardian Life Insurance Company of America; Sun Life Financial; and Cendana Capital. Previous backers also contributed, including Adams Street Partners, Cambia Health Solutions, Catalyst Health Ventures, Industry Ventures, Lerer Hippeau Ventures, Schooner Capital, Tribeca Venture Partners, and Vaizra Investments.