SA国际传媒

Here is a statement of fact, followed by a cliche: The health insurance industry in America isn鈥檛 very consumer-friendly, and software is eating the world. And where those two ideas meet, there is a company hoping to use software to improve how American insurance works. And it has made real progress.

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Backed by investors like , , and , is a technology startup building a software layer between the various parties in the world of health insurance, helping industry members pass information between each other more quickly and with fewer errors.

Founded in 2017 with offices in both San Francisco, California and Durham, North Carolina, has raised $4 million to date, including a Pre-Seed round in April 2018 and a Seed raise in November of that year.

Noyo is a wager that application program interfaces, better known as APIs, can knit together an industry famous for printed paper, faxes, and errors. Notably, Noyo, a sort of for health insurance data, is already operating commercially. Plaid, another startup, has for its API service focused on the banking industry. Similar to what Noyo wants to do, Plaid helps pass information between members of a somewhat antiquated industry.

Noyo is intriguing because if its manages to situate itself in the middle of the American health insurance market (a market ) it could become a hugely wealthy, if largely invisible, technology company. Or, its efforts could fizzle and the company may wind up merely another failed attempt to hack at the waste and misery of modern medical insurance.

To understand how far along Noyo is, and how it came to be we have to rewind the clock and visit a different company. Let鈥檚 talk about back when Noyo co-founders and Dennis Lee worked for the Bay Area-based unicorn.

A Light In The Paperwork Abyss

In its heyday, Zenefits was hailed as one of . Capital flocked to the disruptive insurance player, including a in 2015 led by and valuing the company at $4.5 billion.

Zenefits later nearly crumbled under the weight of its own growth, and .

According to Goggin, Noyo鈥檚 CEO, Zenefits was 鈥渁n insurance broker, as well as a benefits software platform,鈥� making it a software company that had to work with antiquated systems.

Goggin, a product manager at the company, helped brokers and clients 鈥渟hop for and explore their insurance options,鈥� along with assisting customers secure price quotes from partnered insurance carriers, enrolling individuals, and managing those policies.

Zenefits didn鈥檛 grow quickly on accident. Instead, Goggin explained to SA国际传媒 News, the startup hit on something that the market really wanted. The company 鈥済rew incredibly quickly in large part because our product really struck a chord with the small businesses that we were selling into,鈥� she said.

Its customers 鈥渉ad been struggling with paperwork for a long time,鈥� according to Goggin, and with requirements to 鈥渇ax something to an insurance company and not knowing where your data was, at any point.鈥�

Because Zenefits offered a way around all that hassle, 鈥渋t became very popular very, very quickly. And we grew very fast.鈥�

While Zenefits grew like hell, making it a darling of the technology press and the venture scenes, it was itself dealing with a process that struggled to scale.

Tech Has Its Own Challenges

Zenefits is a technology company, but it couldn鈥檛 rebuild the industry it operated in from scratch. As Goggin put it during an interview, Zenefits was 鈥渁ble to build a lot of tooling and technology around our products,鈥� but was 鈥渓imited by the technical and process constraints of our partners.鈥�

There wasn鈥檛 an absolute lack of connective technology for Zenefits to use, but what existed wasn鈥檛 sufficient. An information format called EDI, or electronic data interchange, helped some. Goggin describes EDIs a 鈥減recursor鈥� to APIs, making them something between nothing and a possible solution.

EDIs didn鈥檛 fix what was most broken in the system that Zenefits operated inside of. The problems that Zenefits ran into from archaic tech, missing information, and the like could 鈥渂e traced back to this sort of root cause,鈥� according to Goggin, 鈥渨hich is that these [insurance-related business] systems don’t talk to each other.鈥�

Zenefits managed to take some of the mess out of the insurance world for its customers, but it then had issues to deal with on its own side. And there wasn鈥檛 a technology layer to help all the market participants it spoke with in sync.

So Goggin and her co-founder Dennis Lee decided to build a company that could knit the insurance companies and brokers and even the new platforms together.

Frustration Breeds Innovation

Noyo was born out of Lee and Goggin鈥檚 frustrations with the technology solutions available to them at Zenefits (Lee worked on EDIs at Zenefits).

The two founded Noyo in Fall 2017, spending the first half-year of their business 鈥済oing extremely deep on customer validation鈥� according to Goggin.

They wanted to be sure that their 鈥渕acro vision鈥� of a digital infrastructure for health insurance connected by APIs was correct.

It was. The two founders showed mockups of what their product might look like to brokers and other players in their market, only to have them say, 鈥淥h, yeah, we need this yesterday. Like, let me can I get the API keys? Can I try it out?鈥� Goggin recounted.

The positive reaction was a push to move faster, Goggin told SA国际传媒 News: 鈥淲e had to go back and say 鈥榦kay, let鈥檚 go.鈥欌�� She noted that the market鈥檚 reaction to their early conversations helped her and Lee know that it was time to 鈥渞aise money, bring on a team and really go full force after this opportunity.鈥�

Market Reception

Noyo launched its product with a few 鈥渆arly carrier partners鈥� earlier this year. That means that its APIs are passing information between parties in its market and helping sign individuals up for insurance. 鈥淚t鈥檚 working extremely well,鈥� Goggin said.

There is a slow, but nearly-viral effect that the company鈥檚 launch is having on its go-to-market strategy so far. According to the company, when it links up with a new platform, it鈥檚 often asked to support new carriers. And when it adds a new carrier, that carrier will link the company to other parties it does business with, spreading Noyo鈥檚 reach, according to Goggin.

That鈥檚 a process slower than a meme going viral on TikTok, but for the insurance industry, it may qualify as wildfire-quick.

And as the startup adds new partners, it grows its revenue.

Noyo鈥檚 customers pay on a 鈥渧olume basis鈥� according to Goggin, who went on to tell SA国际传媒 News that her company charges 鈥渙n the number of people policies that we’re managing.鈥� So, as one partner or customer鈥檚 usage of Noyo goes up over time, the startup should see rising revenue from that account.

This matters for a key reason. We can presume that Noyo鈥檚 gross margins are pretty good; it鈥檚 a software company after all. And as the company charges based on a policy number that may grow over time on a per-customer basis, its revenue may resemble that of a traditional SaaS company. Recall that investors covet SaaS revenue, assigning it rich valuations due to its high margins and recurring nature. Noyo should be able to enjoy similar valuation metrics.

The Future

Like many companies that build APIs, linking together data from various third-parties, Noyo is bullish on what can be built on top of its budding infrastructure. Goggin told SA国际传媒 News that she 鈥渨ould like to see a lot more innovation and creative products built around the infrastructure that we’re creating.鈥�

Noyo wants its service to become a platform upon which other companies can build, but it doesn鈥檛 want to write all the apps. It has a more pick-and-shovels approach in mind.

And that鈥檚 that. More when the company is willing to let a revenue number slip.

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