InstaMed, as part of JPMorgan Chase, faces new challenges and competitors

Tom Paine

By offering a better customer experience for healthcare payments, Philadelphia-based InstaMed created a new market and was acquired by JPMorgan Chase a year ago for a reported $500 million-plus.

But by no means is the market closed to competition. In fact, new investments are springing up all over the place. New York-based Cedar just scored a $102M series C funding round, led by Andreessen Horowitz, which has also been active in Philly lately. Cedar describes itself as having payment systems similar to InstaMed. I’ve found no information as to how much in payments Cedar is processing.

Also, Atlanta-based Patientco seems to be offering similar services. And San Francisco-based Alpha Heath just raised $29 million, led by Andreesson Horowitz again.

Total US healthcare expenditures are just under $4 trillion per year. Out of pocket consumer payments are about 10% of that, or $400 billion. That’s the primary market InstaMed serves. The market has grown faster than total expenditures, largely due to higher deductibles..

InstaMed is currently processing about $100 billion per year.

Some time before the JPMorgan acquisition, I had discussed with InstaMed management whether its product would become”smarter”, perhaps offering consumers more benefits and options.. I was told that InstaMed had operated to that point with a single objective of growing payment volume in a highly secure environment. That focus payed off. But I still think more intelligence could be built into its product.

Covid-19 has added complexities, but it could convert more consumers to online payments. InstaMed.now has just shy of 300 employees between Philadelphia and its Newport Beach data center according to LinkedIn (sometimes not a perfect indicator). It had 258 employees at the time of its acquisition.

JPMorgan is also part of joint venture Haven, along with Amazon and Berkshire Hathaway, that aims to revolutionize healthcare.

Tom Spann’s Act II, Brightside, raises $35.1 million from Andreessen Horowitz (a16z) with participation from existing investors Comcast Ventures and Trinity Ventures

Tom Spann / Brightside website

Tom Paine

Brightside, which provides. tools to help companies’ employees stay on the right financial track with their personal finances, announced a $35.1 million Series A investment today.

The round was led by Andreesson Horowitz, with Comcast Ventures, Trinity Ventures and others also participating..Tom Spann, who founded employee health navigation company Accolade, which now has a valuation of $620 milli9n, is trying to replicate his success with healthcare by taking a similar approach to financial management. Accolade filed for an IPO back in February.

in its announcement, Brightside said it would have three headquarters: Chandler, AZ, San Fransisco, and Philadelphia, though Philadelphia presently has only a handful of the 103 employees listed on LinkedIn. The presence of Andreesson Horowitz, along with continued support from Comcast Ventures, is important.

Andreesson Horowitz also led a large round in Acccolade, so presumably its reasonably pleased with that investment and Spann as a founder. Spann cut his last formal tie with Accolade late last year, leaving its board to focus on being CEO of Brightside.

There is definitely a sense of missionary zeal about Spann, a belief in doing good, but nonetheless the venture must make financial. sense. Brigthside claims to put $1200 per year back in the pockets of the average employee, a number that seems low but honest. Expenses must. be measured against that number. Also, there must be limits on how far you can go in advising employees without running into regulatory issues.

Its still an unproven concept. Comcast as a client has been a test case.