The passage of the Affordable Care Act revealed many gaps in the healthcare market and frustration has grown for consumer when thinking about having to deal with their insurers. Zipari saw this as the perfect opportunity to improve healthcare CX to lower healthcare costs across the system. Zipari achieves this through its customer experience platform for the healthcare industry. The company founded in 2014 has created 12 enterprise solutions that have multifunctional capabilities ranging from simple to complex such as digital alerts and a member portal that allows health insurers to view a holistic approach of the customer journey; resulting in optimized consumer experience and improved customer satisfaction.
AlleyWatch sat down with CEO and Founder Mark Nathan to learn more about the inspiration for the company, the future expansion plans, and latest round of funding, which brings the company’s total funding to $34.5M across four rounds.
Who were your investors and how much did you raise?
We raised $22.5M in a Series B funding round. Vertical Venture Partners, an early-stage venture capital firm investing in enterprise technology companies that target vertical markets, led the financing round, which included Health Velocity Capital, an investor in healthcare software and service innovators, Healthworx, the healthcare investment and innovation arm of CareFirst BlueCross BlueShield, and Horizon Healthcare Services, Inc. (Horizon), New Jersey’s oldest and largest health insurer.
Tell us about the product or service that Zipari offers.
Zipari is the first and only customer-experience platform built specifically for health insurance. Customer experience transformation is one of the most critical topics in health insurance boardrooms; its success relies heavily on the seamless integration of customer data from multiple systems inside the insurer and the rapid implementation of the latest technology. Zipari supercharges these initiatives and empowers payers with the most effective platform for delivering engaging and superior customer experiences.
For example, in May 2019, Zipari launched CX Engagement Hub, which empowers health insurers to develop two key capabilities: (1) assigning priorities to cross-departmental goals for each member; and (2) intelligently orchestrating and prioritizing engagement via a consumer’s preferred communication channel. The goal of both of these capabilities is to help consumers improve their health and reduce their personal healthcare expenses. And in the past year, Zipari launched its Partner Network, aimed at helping health plans accelerate delivery of integrated CX and deliver a certified portfolio of CX solutions. Both the CX Engagement Hub and the Partner Network will allow health plans to gain better insight into health plan member needs, sentiment, and behavior.
What inspired the start of Zipari?
We recognized a massive shift underway in the healthcare industry following the implementation of the Affordable Care Act and the consumerism it gave rise to, and we saw that CRM was (and still is) going vertical to meet customer demands. With those forces at play, we saw an opportunity to improve and simplify healthcare interactions and decisions for consumers, which would help lower healthcare costs across the system and help carriers achieve greater retention and renewal rates. We also knew, from our experience in health insurance, that the unique way health insurers’ technology systems had developed over the years made it incredibly difficult for them to develop the technology on their own. And so, we decided to build the first and only customer experience solution with deep CRM integration exclusively for the healthcare industry.
How is Zipari different?
Zipari is the only CX technology company to specialize exclusively in health insurance with a native understanding of the industry, which gives us an instinctive understanding of our clients’ goals.
Our CX Engine powers health plans with data and predictive analytics to personalize and improve the consumer experience, influence positive health behaviors and increase operational efficiencies to reduce healthcare expenses for members.
What market does Zipari target and how big is it?
Zipari targets health insurance carriers nationwide. Today, we serve 18 health insurance carriers with more than 13M members using Zipari products. However, the full market includes over 800 health insurance companies and the entire US population.
Who do you consider to be your primary competitors?
Zipari primarily replaces custom-built software at health insurance companies. For instance, most health plans have spent millions of dollars building their call center software. With Zipari, health plans can deploy call center solutions 10x faster, and 10x cheaper.
What’s your business model?
We only sell to health insurance companies, and we have a suite of 12 enterprise products. Our goal is to make it easy for health insurance companies to build positive and trusted relationships with their members. In order to meet this goal, Zipari had to establish the best possible industry knowledge. Specifically, outside of engineers, we only hire people with over five years of health insurance experience. This allows us to have more productive and valuable conversations with our customers. Once we establish a relationship on one of our products with a health insurance company, we typically expand the relationship to additional products.
What was the funding process like?
The actual funding process wasn’t too difficult because I had built a lot of relationships with VCs over the first five years at Zipari. Specifically, I met with over 120 investors during that period. When we decided to raise capital, we set the terms and provided the term sheet to the six most strategic investors in the healthcare space. Health Velocity joined Vertical Venture Partners in the raise, and we couldn’t be more excited about our choice.
What are the biggest challenges that you faced while raising capital?
The biggest challenge for our Series B was limiting the amount of the investment. Two of our top six investors could just not go down to the amount of investment we had open. They wanted to deploy more capital and had governance controls in place that prohibited them from making this size of an investment. Of the remaining four investors, two wouldn’t accept our valuation. Luckily the remaining two preferred investors did, and we went with Health Velocity based on their extremely strategic LPs.
Two of our top six investors could just not go down to the amount of investment we had open. They wanted to deploy more capital and had governance controls in place that prohibited them from making this size of an investment. Of the remaining four investors, two wouldn’t accept our valuation.
What factors about your business led your investors to write the check?
The most important factor is the talent. We have an exceptionally strong management team for our size organization, and we have a very robust staffing strategy that results in the best possible talent. We literally had over 8,000 applicants last year and only hired 1.3% of the applicants. Having exceptional talent results in an extremely capital-efficient model because people come up to speed faster and we rarely let go of talent.
Other important factors are industry knowledge, the ability to execute very large enterprise deals, and a product suite that is unmatched in the health insurance industry.
We have an exceptionally strong management team for our size organization, and we have a very robust staffing strategy that results in the best possible talent. We literally had over 8,000 applicants last year and only hired 1.3% of the applicants. Having exceptional talent results in an extremely capital-efficient model
What are the milestones you plan to achieve in the next six months?
The proceeds from our Series B funding round will be used to widen distribution channels, expand partner integrations and scale the development of Zipari’s highly configurable product lines with focused investments in strategic innovations.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Build relationships early. Do not wait until you need capital to start figuring out which investors are most strategic and will work best with your company and existing board.
Where do you see the company going now over the near term?
In the near term, we plan to make three primary investments in distribution, product, and technology. Distribution, or sales and marketing, investments will focus on improving top-line revenue for carriers and providing superior member experience. On the product side, we’ll continue to invest in our CX Engagement Hub, and on the technology front, we’ll make investments in our people so that we can provide a complete SaaS solution to support all the CX needs for health insurance companies.
What’s your favorite restaurant in the city?
Freemans on Freeman’s Alley. I’m a big fan of ambiance and this place transports you out of the city. Don’t miss the “secret” speakeasy, Banzabar above the restaurant!
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