Hit by rising costs and a tight labor market, smaller companies may be ready to change the way they buy employee benefits.
At least that’s hope Nava Foleya New York-based brokerage that uses technology to bring the benefits of a big company to small employers while reducing costs.
To capitalize on the future opportunities it sees, the company has raised $40 million in a Series B round led by Thrive Capital, a New York-based venture capital firm. The investment, disclosed in early June, is based on Nava’s $20 million in seed and Series A funding.
“We’re in the midst of a huge change, and the interests are changing a lot. The needs of buyers are changing a lot,” Nava co-founder and CEO Brandon Weber said in a video interview. “And Nava aims to play a considerable role in modernizing the welfare market.”
Nava was founded in 2019 to help employers and employees make better choices around their health and wellness benefits and get a better return on their investment in those benefits. The company also assists small HR departments in designing and administering benefit packages.
In particular, Nava sees an opportunity to help employees during the benefit enrollment process and then when they need access to health care or the benefits of their choice, Weber said. “We’re going to use a lot of money to build tools and build out processes and teams on Nava to make sure employees are supported at both times.”
The company also plans to invest in tools for employers, such as a search engine launched earlier this year, to help HR managers find digital health benefits.
According to information provided by the company, nearly 3,000 individual HR users searched through the engine in the second quarter. Top search categories include mental health, healthcare navigation, student loans, and financial health.
Inflation could prompt companies to cut back on services for employees, especially digital tools that haven’t gained widespread traction. Smaller companies may be particularly cost-conscious. According to the data, the cost of healthcare benefits per employee will increase by 9.6% in 2021 for companies with 50 to 499 employees, and 5% for companies with 500 or more employees. A survey by Mercer.
But Weber says low engagement often stems from a lack of knowledge among employees. “The understanding of what they have and how to use it is really poor,” Weber said. “That’s the fundamental problem we’re trying to solve here.”
Webb added that challenging economic conditions could boost employers’ interest in alternatives to benefits like Nava. “It’s a dynamic market right now, and we think the shift from the traditional benefits broker paradigm to what we’re trying to bring… the timing is just right.”
Nava’s formula seems to work. The company, which has about 60 employees, said its customers and revenue were growing. Since the end of 2020, Nava’s annual recurring revenue has grown 224% and the number of customers has more than doubled, according to a recent fundraising press release. Webb declined to disclose Nava’s revenue or valuation.
In addition to Thrive, Nava’s Series B round also attracted existing investors Avid Ventures, Quiet Capital and Voice Ventures. Including new investors GVK5 Ventures and Homebrew, as well as One Medical founder Tom Lee and real estate giant CBRE Global’s former CFO Jim Groch.
Photo: drogatnev, Getty Images
