XP Health Secures $33 Million to Expand Affordable Vision Care and Eyewear Services

Antonio Moraes, the grandson of a renowned Brazilian billionaire, has always been driven by independent entrepreneurship. After graduating college, he founded one of Brazil's first impact funds, focusing on companies that make healthcare more accessible. However, while pursuing his MBA in Business and Healthcare Policy at Stanford, Moraes realized he wanted not just to invest but to build his own company.

During his studies, Moraes and his co-founder, James Wong, a graduate student in engineering, visited eyewear manufacturing plants in China. They were shocked to find that designer frames sold in the U.S. for up to $600 cost only $10 to produce. "We were astonished by these huge markups," Moraes told.

Eyewear and vision care services can be expensive, and many employees buy frames through vision insurance, but full coverage is rarely available. "Insurance issues lead people to expect no out-of-pocket costs, but in reality, the bill can be $300," Moraes noted.

In late 2018, Moraes and Wong founded XP Health. However, during the pandemic, they shifted the startup's focus to a digital platform using artificial intelligence, offering vision exams and eyewear at significantly lower prices compared to traditional insurance plans.

On Thursday, XP Health announced a Series B funding round of $33.2 million, led by QED Investors with participation from Canvas Ventures, American Family Ventures, HC9 Ventures, Valor Capital Group, and Manchester Story. This round follows a Series A round in which the company raised $17.1 million less than two years ago.

XP Health members purchasing eyewear through the platform can save up to 69% off retail prices. The company claims it does not mark up frames or lenses sourced directly from Asia. Instead, XP Health earns revenue through regular membership fees. "Many of our members pay nothing for high-quality designer frames and lenses, as well as vision exams," Moraes said.

The XP Health AI platform uses facial recognition technology to recommend eyewear suited to the user's style and face shape. Members can also buy discounted eyewear at physical optical stores, but Moraes emphasized that similar frames might be two to three times cheaper on the company's online platform.

Over the past two years, XP Health has expanded its corporate client base from 30 to over 3,000, including Docusign, Navistar, Chegg, and Sequoia Consulting, which offer the company's services as employee benefits. XP Health has also formed strategic partnerships with insurance companies like Guardian Life Insurance, providing vision benefits to small businesses.

While XP Health is not the only company bypassing intermediaries in the eyewear market, it positions itself as a unique startup challenging traditional vision insurance providers like VSP and EyeMed Vision Care. Moraes asserts that XP Health is not an insurance company in the traditional sense but rather a corporate benefit without real insurance risk.