Behind the scenes of one of the biggest health funding rounds ever

That’s devotion. 

Back in 2021, Devoted Health raised $1.15 billion in its Series D. In part, that staggering number was a sign of the times. In 2021, health tech deals skyrocketed in both deal size and volume as investors clamored to be part of supercharged medicine in the wake of the COVID-19 pandemic. 

Devoted provides Medicare Advantage coverage for seniors. But unlike other health care providers, Devoted also is an online medical group itself—it is a “payvider” (payer+provider=payvider) as Bob Kocher, who was the seed investor and chief medical officer of the company in its first two years, called it. The idea started with Ed and Todd Park, entrepreneurs who also founded Athenahealth, a successful medical records startup. With Venrock seed investors Bob Kocher and Bryan Roberts, the team started building Devoted in 2017. 

Kocher explained that investors continue to be attracted to Devoted because of its growth within its market, aging seniors, and because the tech company successfully reaches its user base. Devoted now has over 67,000 members—twice the size of its 2021 enrollment—and brings services for seniors that were previously provided separately under one umbrella. “[The business model] led investors to say, ‘Oh, my goodness, this could be a really big health giant because it’s both an insurance company and a medical group–two businesses stuck together,” Kocher told me. Devoted has a member net promoter score of 79. To anyone who has interacted with the insurance bureaucracy, an insurance company’s consumer satisfaction rate being higher than Netflix, Amazon, and Apple is more than noteworthy.

Roberts went way back with the Parks because he had led the institutional investment for Athenahealth and worked with them on other ventures. Kocher came into the picture when he and Todd Park were both working in the White House during the Obama administration. Early on, the Devoted team was tight-knit. “‘Would you trust them with your life?’ was a criterion used to evaluate potential hires early in Devoted’s life,” wrote Roberts and Kocher on LinkedIn. 

Kocher explained that the Series A investors were an expansion of the founding circle, but the investing round was still a familiar group. “That was all like family,” he said of the Series A investors. “They have worked with us, know us, and trust that we do good work,” said Kocher. 

Annie Lamont, whose firm OAK HC/FT led the Series A, considered her investment in Devoted a win. “[The Series A] did a $12 million valuation transaction and is going to be very important,” said Lamont. “It’s the most successful, and maybe the only successful sort of new Medicare Advantage player in the U.S.,” Lamont added. 

By Devoted’s B round, which was led by Andreessen Horowitz’s Vijay Pande, “The subsequent investors saw evidence that the service was working,” Kocher explained. Pande said that what excited him about Devoted and inspired him to write a “very large check into it” was the company’s move from fee-for-service to value-based health care. “The beauty of the way Devoted built their whole system is that they built the value rails first, which comes naturally with Medicare Advantage, and then putting tech into it allows them to supercharge compared to other Medicare Advantage plans,” said Pande. “Having a tech-enabled payer and provider with a very tight link is an extremely powerful approach,” he added. (Bets on Devoted helped propel both Pande and Lamont into Fortune’s recent list of 11 power players dominating health tech VC investing, which you can read here.)

The company’s Series D round was led by Uprising Ventures and SoftBank Vision Fund 2. “We believe that Devoted Health will become a nationwide beacon of a new paradigm for what caring in health care can be,” Uprising investor Tabreez Verjee said of the deal. 

Not only is Devoted the first “payvider”—it’s the only one. “There haven’t been other companies that emulate Devoted,” Kocher said. “There’s been companies who have just been insurance companies, and they struggle because they don’t have the care.” Part of what makes this model difficult is the regulatory gymnastics that come with being a medical group and insurance company. Kocher explained that Devoted is regulated by both the state department as an insurance company, and by Medicare as a medical group. “It’s complicated,” he acknowledged. “It took us two years just to build the tech.” 

Lucy Brewster
Twitter: @lucyrbrewster
Email: lucille.brewster@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Sitetracker, a Montclair, N.J.-based deployment operations management software company for infrastructure providers, raised $66 million in Series D funding. Energize Ventures led the round and was joined by investors including H.I.G. Growth Partners, National Grid Partners, Clearvision Ventures, NTT Docomo Ventures, Kingfisher Investment Advisors, and Raine Next-Gen Communications. 

- Pigment, a Paris-based business planning platform, raised $65 million in Series B+ funding. IVP and Meritech Capital co-led the round. 

- Caraway, a New York-based home and lifestyle brand, raised $35 million in funding led by McCarthy Capital.

- OX Security, a Tel Aviv, Israel-based software supply chain security platform for DevSecOps, raised $34 million in funding. Evolution Equity Partners, Team8, and M12 co-led the round and were joined by Rain Capital. 

- Toqio, a London-based fintech SaaS provider, raised €18.7 million ($17.67 million) in Series A funding. Albion VC led the round and was joined by investors including Aldea Ventures, Seaya, Speedinvest, and SIX FinTech Ventures. 

- Songfinch, a Chicago-based song creation and collaboration platform, raised $17 million in Series A funding led by Valor Siren Ventures.

- Doccla, a London-based virtual ward and patient monitoring technology provider, raised £15 million ($16.69 million) in Series A funding. General Catalyst led the round and was joined by investors including funds managed by KHP Ventures, Giant Ventures, Speedinvest, and others.

- Lunio, a Manchester, England-based digital ad protection solution provider against fake users and bots, raised $15 million in Series A funding led by Smedvig Capital.

- Meliora Therapeutics, a Menlo Park, Calif.-based oncology-based biotech company, raised $11 million in seed funding. HOF Capital and ZhenFund co-led the round and were joined by investors including Obvious Ventures, Village Global, BrightEdge, Pebblebed, Axial, Olive Capital, and other angels. 

- Detectify, a Stockholm, Sweden-based external attack surface management platform, raised $10 million in funding led by Insight Partners. 

- Regie.ai, a San Francisco-based content platform, raised $10 million in Series A funding. Scale Venture Partners led the round and was joined by investors including Foundation Capital, South Park Commons, and other angels. 

- Kahun, a Givatayim, Israel-based clinical reasoning tool for physicians, raised $8 million in seed funding. LocalGlobe led the round and was joined by investors including European Innovation CouncilFund and The Founders Kitchen. 

- Smart Token Labs, a Sydney, Australia-based Web3 open source software development company, raised $6 million via SAFT led by Fosun International co-founder Mr. Liang Xinjun. 

- Minteo, a Bogotá, Colombia-based NFT marketplace, raised $4.3 million in seed funding. Fabric Ventures, Dune Ventures, CMT Digital, OpenSea Ventures, Impatient VC, Susquehanna Private Equity Investments, SevenX Ventures, FJ Labs, Big Brain Holdings, G20 Ventures, Zero Knowledge, Alliance DAO, AngelDAO, and other angels invested in the round. 

- KOOS, a Tallinn, Estonia-based equity-like benefits provider to non-employees, raised $4 million in seed funding. Plural Platform led the round and was joined by investors including LocalGlobe, Tiny.vc, and Matt Clifford.

- 7Analytics, a Bergen, Norway-based flood prediction platform, raised $2.5 million in seed funding. Momentum Partners led the round and was joined by investors including Construct Venture, Link Capital, and Obos VC. 

PRIVATE EQUITY

- Rotunda Capital Partners acquired a majority stake in Canter Power Systems, a Greensboro, N.C.-based home standby power generators installer. Financial terms were not disclosed.

EXITS

- Equistone Partners Europe acquired a majority stake in SF Filter, a Bachenbülach, Switzerland-based distribution platform for mobile and industrial filters, from Ambienta. Financial terms were not disclosed.

OTHER

- Aiven acquired Kafkawize, an Amsterdam-based open source data governance tool. Financial terms were not disclosed. 

- Brand Velocity Group acquired SCORE Sports, a Wilmington, Calif.-based designer, manufacturer, and seller of youth team sports uniforms and equipment. Financial terms were not disclosed.

- CloudBees acquired ReleaseIQ, a Santa Clara, Calif.-based DevOps platform. Financial terms were not disclosed. 

- CTG acquired Eleviant Tech, a Dallas-based digital transformation company. Financial terms were not disclosed. 

- Wealth Enhancement Group acquired Bohmer Kilcoyne Wealth Management, a Cincinnati-based financial advisor. Financial terms were not disclosed.

IPOS

- Ithaca Energy, an Aberdeen, Scotland-based oil and gas producer, plans to raise about $1 billion in an initial public offering in London this year, according to Bloomberg. 

FUNDS + FUNDS OF FUNDS

- Town Hall Ventures, a New York-based venture capital firm, raised $350 million for a fund focused on investing in health care companies. 

- Fort Point Capital, a Boston-based private equity firm, raised $340 million for a fund focused on lower middle market companies with less than $100 million of enterprise value. 

PEOPLE

- Ara Partners, a Boston, Dublin, and Houston-based private equity firm, hired Ari David and Manasi Desai as vice presidents. Formerly, David was with AUA Private Equity and Desai was with KKR. 

- Balderton Capital, a London-based venture capital firm, hired Rachel Bremer as chief marketing and communications officer. Formerly, she was with Milltown Partners.

- Eclipse Ventures, a Palo Alto-based venture capital firm, hired Charly Mwangi as partner. Formerly, he was with Rivian.  

- Rainier Partners, a Seattle-based, private equity firm, hired Dave Shephard as director of portfolio operations. Formerly, he was with Bain & Co.   

- Ten Eleven Ventures, Burlingame, Calif.-based venture capital firm, hired Dave Palmer as general partner. Formerly, he was with Darktrace.