Dive Brief:
- Oscar announced Monday it has received $400 million in new funding from a round led by mutual fund company Fidelity, followed by returning investors Google Capital, General Catalyst, Founders Fund, Lakestar, Khosla Ventures, and Thrive Capital, a company operated by Oscar's Josh Kushner.
- Following the deal, sources valued Oscar at $2.7 billion, Forbes reported, noting that's up by about $1 billion since September 2015 when Oscar was valued at $1.7 billion after receiving $32.5 million from Google Capital.
- Forbes suggests the massive investment from Fidelity provides strong validation for Oscar in light of the recent collapse in tech valuations.
Dive Insight:
The massive cash infusion appears to go hand in hand with Oscar's grand plans to continue its rapid expansion and meet its goal of increasing enrollment from 145,000 currently to 1 million within five years.
"We are going after one of the largest markets in the U.S., one that is 20% of GDP,” Kushner told Forbes. “We have the capital, the brand, the technology to have tremendous impact on the industry.”
Oscar plans to make it happen by continuing to use narrow networks to compete on price. The company currently sells plans in New Jersey and New York, as well as California and Texas, which it added this year.
As Bloomberg notes, although achieving one million members would make Oscar a significant player in the individual market, it won't put it anywhere near the size of the top nationwide health insurers. Oscar is already experiencing some growing pains in California as it struggles to find a niche alongside major competitors with broader networks.