Antonio Moraes, a descendant of a well-known Brazilian billionaire, didn’t follow the conventional path of joining his family’s established business empire, which includes construction companies and a bank. Instead, upon graduation, he set up one of Brazil’s pioneering impact funds. Its main focus was investing in companies that aimed to make healthcare more accessible and affordable.
While studying at Stanford University, where he earned his master’s degree in business administration and healthcare policy, Moraes had an epiphany. Rather than investing in impactful businesses, he felt compelled to establish his own.
As part of an entrepreneurship course, Moraes, along with his business partner and engineering grad student, James Wong, visited numerous eyewear factories in China. They were surprised to learn that designer frames sold in the U.S. for up to $600 only cost around $10 to manufacture. Moraes found these markups to be excessive, as he shared with TechCrunch.
Moraes highlighted that due to high costs of vision care and eyewear, many people resort to using their vision insurance to purchase frames. However, insurance benefits often fall short, leaving customers with hefty out-of-pocket expenses.
With this in mind, Moraes and Wong launched XP Health in late 2018. The startup initially took a digital-first approach, leveraging AI to offer eye exams and eyewear benefits to employees at a fraction of the cost of traditional vision insurance plans.
Recently, XP Health secured a $33.2 million Series B investment, spearheaded by QED Investors and featuring contributions from Canvas Ventures, American Family Ventures, HC9 Ventures, Valor Capital Group, and Manchester Story. This comes on the heels of their $17.1 million Series A funding.
XP Health members who purchase eyeglasses online can enjoy substantial savings of up to 69% off the retail price. The company sources frames and lenses directly from Asian factories, avoiding any markup. Instead, their revenue is generated through recurring membership fees.
Moraes further explains that in many instances, members pay nothing for high-quality designer frames, top-tier lenses, and even the eye exam.
XP Health’s innovative AI-driven platform uses facial recognition technology to recommend glasses that complement each member’s style and facial structure. Although members have the option to buy glasses from brick-and-mortar retailers at a discount, Moraes points out that prices on their online platform can be significantly lower.
In the past two years, XP Health has grown its corporate customer base from 30 to over 3,000, including names like Docusign, Navistar, Chegg, and Sequoia Consulting. They’ve also forged strategic alliances with insurance providers such as Guardian Life Insurance.
Despite the crowded market, Moraes believes that XP Health is the only startup challenging traditional vision insurance providers like VSP and EyeMed Vision Care. However, Moraes clarifies that XP Health does not identify as an insurance company, as they offer a corporate benefit, not traditional insurance.
