Accolade, the healthcare IT company that filled its C-suite with the executive team behind one of the Seattle area’s biggest startup success stories and established a new headquarters here earlier this year, has added $70 million in fresh capital to its coffers from Andreessen Horowitz and Madrona Venture Group, among others.
The funding, part of a Series E investment round that the company began raising in July 2015, brings the total venture capital raised by Accolade in its nine-year history to $160 million. Other investors in the round include McKesson Ventures and a unit of Independence Health Group.
Accolade describes itself as a healthcare concierge. Its customers are large, self-insured companies—as well as health insurance providers—that want to see their employees and their families make better use of the healthcare benefits they provide. People can call on the service for personalized help navigating health plan benefits, evaluating care options, and answers to other vexing healthcare questions, all from a single point of contact who follows up with patients as needed. The company says its services reduce costs by 5 to 15 percent, while improving insurance usage, health outcomes, and patient satisfaction.
Last year, Rajeev Singh and Mike Hilton, co-founders of travel expense software company Concur, joined Accolade as CEO and chief product officer, respectively. Concur was acquired by SAP for $8.3 billion in 2014 in one of the Seattle tech industry’s biggest deals. Several other former Concur executives have subsequently joined Accolade’s ranks as the company opened up shop in the Washington State Convention Center in downtown Seattle.
The new funding will support technology development, research, sales, and marketing. The company says it provides services to more than 500,000 people and is growing rapidly.
Madrona managing director Matt McIlwain acknowledged that this is an “unusual investment” for the Seattle-based firm, which typically focuses on early stage, broadly IT-driven companies based in the Pacific Northwest.
The connection to Accolade stems from Madrona’s longstanding relationship with the Concur founding team now helming Accolade, as well as Rajeev’s brother Steve Singh, another Concur co-founder and its former CEO, now a Madrona strategic director. “It was a team that we had a tremendous amount of trust and respect and experience with in other contexts,” McIlwain says.
More than that, Madrona saw the opportunity to back an established company in an enormous industry undergoing major transformation. The investment comes just as Accolade is planting new roots in the Northwest, and thereby bolstering a healthcare IT sector that supporters are eager to see take root in Washington. The company was founded in 2007 in Philadelphia, where it maintains its other headquarters and a major base of operations. Other locations include Scottsdale, AZ, and Prague, the Czech Republic. The company has more than 700 employees.
McIlwain says Madrona has evaluated the sector—which represents the largest single slice of the U.S. economy, something like 18 percent of gross domestic product—several times over the years. And it has made a handful of other healthcare IT investments, including in Appature, Lumo Bodytech, and SayKara.
“It’s a good time to be looking at healthcare with fresh eyes,” he says.
New payment models spurred by the Affordable Care Act are driving change throughout the healthcare system, including inside of large, self-insured businesses.
“If people have a trusted advisor that can help them make both better healthcare decisions and lifestyle decisions, they will live a healthier, happier life… and ultimately that will have both direct benefits of healthier, engaged employees, and also some economic benefits of lowering the aggregate costs of providing healthcare to your employees,” McIlwain says.
“What’s interesting is that Accolade has proven that out now with a significant number of larger businesses, and is also starting to expand into other areas with health plans, and they’ve done that with relatively modest levels of technology,” he says.
McIlwain says Rajeev Singh and Hilton were attracted to the opportunity to apply technologies such as mobile, cloud computing, and data-driven machine learning techniques to improve and expand Accolade’s personalized concierge service. The company already draws on scores of data streams from health benefits administrators, including claims information and the latest clinical practice standards to provide its recommendations to patients.
Accolade now has more than 50 employees in Seattle and continues to hire. Open roles in Seattle include web developers and designers, software engineers, product managers, and marketing.
