US insurance start-up attracts Goldman and Li Ka-shing as backers

Oscar, a New York start-up with ambitions to transform the US health insurance landscape, has attracted the backing of Goldman Sachs and Li Ka-shing's Horizon Ventures in a new financing round that puts it in the exclusive club of so-called "unicorns", private companies valued at more than $1bn.

The three-year-old insurer, whose investors include billionaires Peter Thiel and Vinod Khosla, is trying to "rewire the US healthcare system" for the Obamacare era by appealing to tech-savvy young customers who are being forced to buy health insurance for the first time.

Its swift elevation to unicorn status underscores the current investor enthusiasm for ambitious start-ups, amid multi-billion dollar tech flotations such as the public debut of Etsy last week.

The latest $145m fundraising values Oscar at $1.5bn, according to people familiar with the deal. The round was led by Mr Thiel's Founders Fund. Oscar's other investors include hedge fund pioneer Stanley Druckenmiller, mutual fund manager Wellington, and Thrive Capital, the venture capital group of Joshua Kushner, Oscar's co-founder and chairman, which has previously backed Instagram and Warby Parker.

After two rounds of annual customer enrolment through the New York health insurance exchange set up under Obamacare, Oscar has attracted almost 40,000 customers.

Joshua Kushner, 29, founded the company - with Mario Schlosser, with whom he had previously started a Latin American games developer called Vostu, and Kevin Nazemi - after opening his health insurance bills and realising he did not understand a word of them.

Oscar's simplified plans and swish customer interfaces are designed to stand out on the state-run exchanges, where individuals without employer-based coverage go to pick their insurance.

The company has embraced technological advances, such as free "click to call" phone consultations with doctors and wristwatch-style "fitness trackers" that monitor customers' steps and incentivise them to stay healthy.

Behind the scenes, there is a single patient tracking system designed to yield more customer data that can be used to improve customer service and efficiency. Much of the new money will fund work to integrate the system with health providers such as hospitals. The company is also planning to launch in California and Texas.

"We are still in the infant stages as a tech and insurance company," said Mr Schlosser, Oscar chief executive. "We have a smaller tech team than anybody else in healthcare and we have much grander ambitions in the technology we want to build to rewire the healthcare system."

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