citybiz+ Yuzu Health Closes on $5 Million Seed Round

New York-based Yuzu Health, which is building an AI-based system to help smaller companies easily administer self-funded healthcare plans, has raised $5 million in a seed round led by angel investor Lachy Groom’s fund.

Neo, Day One Ventures, Altman Capital, WndrCo, and Browder Capital; and unicorn founders and executives from startups including OpenAI, Stripe, Coalition, Brex, Notion, Deel, Mercury, Lattice, and Vanta also participated, Business Insider said. Yuzu, a five-person startup now, plans to use the proceeds for hiring, and to build new products.

The trio of Max Kauderer, Russell Pekala and Ryan Lee — each of whom has a degree in Math — co-founded Yuzu in the summer of 2022, inspired by their own difficult experiences with health insurance. Yuzu aims to make healthcare affordable, starting with simplified health plan administration and claims processing. Using AI and machine learning, it has built a platform that streamlines manual processes, and could, in the future, create innovative healthcare plans.

‘Over 40% Savings’

“At Yuzu, we’re on a mission to make healthcare more affordable and accessible,” Kauderer, who heads the startup, said in a post on LinkedIn. “We’re building the operating system to make it seamless for small businesses to offer and administer customizable self-funded health plans, enabling savings of 40%+ while providing top-tier benefits.”

Kauderer previously worked at Bain & Company, and Capital One. Pekala, a Harvard graduate in math and computer science, serves as chief operating officer. He was previously an engineer at the online legal service DoNotPay. Lee, who also earned a degree in Math and English at Harvard, is chief product officer. He was previously a product engineer at Lithic, a fintech building infrastructure to support payment cards.

Self-funded plans have been a tough nut to crack because of the risks they pose to employers. Yuzu mitigates some of these risks by allowing customers to design “nontraditional” health plans, and in time, plans to let AI create innovative plans.

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“We’re working with around ten health plans — created by insurance companies, brokers and plan sponsors — that service tens of thousands of employers on their end,” Kauderer told TechCrunch. “Some of these plan designs include direct primary care, cash pay models and financial assistance programs.”

Yuzu functions as a third-party administrator, providing clients with software tools to manage plans. It is fully licensed to adjudicate claims in a majority of U.S. states, with plans to become licensed nationwide.