XP Health raises $32M to provide employees with cheaper eye care

Antonio Moraes, the grandson of a late, distinguished Brazilian billionaire, was never fascinated about joining his family’s conglomerate of construction corporations and banks. Shortly after graduating from college, he founded certainly one of Brazil’s first impact funds, which invested primarily in corporations that made health care more accessible and reasonably priced.

But while attending Stanford University, where Moraes earned a master’s degree in business administration and health policy, he realized that as a substitute of investing in influential corporations, he wanted to start his own.

As a part of an entrepreneurship class, Moraes and his co-founder, engineering student James Wong, visited plenty of eyewear factories in China. They discovered that designer frames that cost up to $600 within the U.S. were only selling for about $10. “We thought there was something seriously wrong with those margins,” Moraes told TechCrunch.

Because vision care and glasses are expensive, many staff buy frames with vision insurance, but the advantages normally don’t cover all the prices, Moraes said. “With vision insurance, people expect to pay nothing, but then they walk out of the optometrist’s office with a $300 bill out of pocket.”

Moraes and Wong began XP Health in late 2018, but in the course of the pandemic, the corporate pivoted the startup’s operations to an AI-powered digital platform that provides employees eye exams and glasses advantages at a significantly lower cost than current vision insurance coverage.

On Thursday, XP Health announced a $33.2 million Series B led by QED Investors with participation from Canvas Ventures, American Family Ventures, HC9 Ventures, Valor Capital Group and Manchester Story. The round comes lower than two years after XP Health’s $17.1 million Series A.

XP Health members who buy glasses virtually can save up to 69% off retail, Moraes said. The company says it doesn’t mark up frames or lenses directly from factories in Asia. Instead, XP Health generates revenue through recurring membership fees.

“In many cases, our members pay $0 for a pair of high-quality designer frames with best-in-class lenses, as well as an eye exam,” Moraes said.

XP Health’s AI-powered platform uses facial recognition to recommend glasses that best suit the user’s style and face shape.

Members can even buy the glasses at brick-and-mortar eyewear stores at a reduced price, but Moraes emphasizes that an identical frame can cost two to thrice less if purchased on the corporate’s online platform.

In the past two years, the corporate has expanded its list of business clients from 30 to greater than 3,000, including Docusign, Navistar, Chegg and Sequoia Consulting, which supply XP Health as a profit to their employees. XP Health has also formed strategic partnerships with insurance providers, reminiscent of Guardian Life Insurance, which provides vision care advantages to small businesses.

Of course, XP Health isn’t the one company cutting out the middleman in eyewear. It’s already a crowded market. Warby Parker sells directly to consumers, as do Eyebuydirect, Firmoo, Pair Eyewear and Zenni, to name a number of other options. But Moraes says XP Health is the one startup taking up the incumbent vision insurance providers, in a market dominated by VSP and EyeMed Vision Care.

But XP Health doesn’t consider itself an insurance company. That’s because what these corporations offer isn’t insurance in the normal sense. “There’s no real risk,” Moraes said. “It’s a corporate benefit.”