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Exclusive: Carrot Fertility closes $24 million Series B in a sign of the sector’s strength

August 18, 2020, 1:15 PM UTC

Fertility benefits provider Carrot Fertility has closed a $24 million Series B round of funding—a broader industry indicator that the once-fringe sector is increasingly becoming part of mainstream health care.

The round, which was undertaken in the middle of the pandemic, was led by U.S. Venture Partners. F-Prime Capital, CRV, Precursor Ventures, Maven Ventures, Uncork Capital, and Silicon Valley Bank also invested in the Series B, which brings the company’s total funding to $40 million. 

“What COVID has revealed is fertility care is core and essential,” says Tammy Sun, Carrot’s CEO and cofounder. “It’s not a perk.”

As a case in point, in July, Carrot saw benefits activity—i.e. appointment bookings—surpass pre-COVID levels. “There’s a return to care that is pretty massive,” Sun says. The increase comes off a strong 2019 in which Carrot saw its growth triple. 

What has shifted amid COVID-19 is the way customers are accessing care. Carrot has responded by launching telehealth products that let patients begin fertility treatment at home and provide remote guidance to pregnant women. Virtual mental-health chats have quadrupled since pre-pandemic, Carrot says. The company also recently launched a virtual pharmacy so patients can receive medication without having to go to a physical location. Sun says these products were always on the company’s road map but were accelerated by the coronavirus. 

In July, Carrot launched a feature that gives U.S. members the ability to be matched with a BIPOC provider. BIPOC are underrepresented in health care, despite research showing that sharing racial or cultural backgrounds can lead to better outcomes, the company says.

Dafina Toncheva, a general partner at U.S. Venture Partners, which led the round, said she’d been watching the sector grow at 10% a year. Assisted reproductive technologies have gotten better, she says, “but the next question is how are these services delivered in a way that makes them more accessible?”

She noted that with current costs and pricing structures, unless fertility treatment is subsidized in the form of a benefit it becomes “completely inaccessible to the vast majority of patients out there.”

USVP had made investments in companies with business models in which the employer is paying for some or all of the service provided, and Toncheva says she liked that Carrot took the same approach. “We think that’s a proven model,” she says. “It’s traditionally a strong way to deliver benefits to individuals.” 

As part of her research, Toncheva spoke with some of Carrot’s customers who all told her it was the company’s most popular benefit and that they viewed providing fertility benefits as a key way to attract and retain talent. She was also surprised by the number of companies that referenced Carrot’s ability to offer fertility benefits no matter where an employee is based. “It’s really important as more companies become global in nature,” she adds.

Carrot, which was founded in 2016, now has more than 100 customers including Box, Snap, Slack, and Peloton. Starting last year, Sun says, the company’s customer base started to really diversify beyond just tech companies—another indicator Sun points to as the mainstreaming of fertility benefits.