Thatch Raised a $38M Series A After Two Years With Almost No Revenue: Chris Ellis's ICHRA Story

TL;DR: Thatch is a health benefits platform built on ICHRA — the Individual Coverage Health Reimbursement Arrangement — which lets an employer hand each employee a budget of tax-free money to buy their own health insurance instead of picking one plan for everyone. It was founded in 2021 by Chris Ellis (CEO), a former MIT cancer researcher, and Adam Stevenson, an early Stripe engineer. The company spent its first two and a half years building, pivoting and launching a product nobody wanted, then in September 2024 announced a $38 million Series A led by Index Ventures and General Catalyst, with SemperVirens, The General Partnership, Andreessen Horowitz and Avid Ventures participating. TechCrunch reported a further $40 million raise in April 2025. At the time of the interview Thatch was serving roughly 1,000 companies and tens of thousands of employees, up from effectively zero about a year earlier. Ellis told the story on The Product Market Fit Show.

What does Thatch do?

In the US, your employer usually picks one health insurance plan and everyone on the team gets it. That works badly for a distributed company, because healthcare is a local business — the plan that covers your doctor in Austin does not cover your colleague's doctor in San Francisco.

ICHRA flips it. The employer sets a budget of tax-free money, and each employee chooses their own coverage. Thatch is the platform that makes that usable: it handles enrollment, the payments, the reimbursement and the payroll reporting, so nobody has to navigate a government exchange or float a $2,400 monthly family premium on a personal credit card.

Ellis calls the result a turbocharged HSA — the money can go to an individual insurance policy, or to out-of-pocket costs a plan would never cover.

"We see people buying GLP1's, you know, directly from Lilly Cash pay. We see people being able to pay for that high dollar therapist that doesn't take insurance." — Chris Ellis, Thatch

The insight was that this is a fintech problem wearing healthcare clothes.

"And we had this insight with the team coming from Stripe, Shopify, Robinhood, that these are FinTech problems and if you build really great financial infrastructure, you can actually create a super compelling product experience." — Chris Ellis, Thatch

Key stat: Thatch charges per employee per month, plus commissions from insurance carriers on enrollments, which Ellis put at an average of mid-hundreds of dollars per employee per year at SaaS-like margins.

Who founded Thatch?

Chris Ellis and Adam Stevenson founded Thatch in 2021. Ellis has an advanced science degree from MIT, spent years in a research lab, moved into biotech software product development, and had built a sales team for a technology startup. Stevenson started his career in security engineering at a large insurance company and became an early Stripe engineer, eventually overseeing an organization that grew from a hundred people to several thousand.

They did not know each other. Ellis was reading new US healthcare regulations about APIs — a term that in his world meant Active Pharmaceutical Ingredient — found Stevenson on a Y Combinator form, and sent a cold email asking for help understanding them.

Ellis's opening argument on the show is that this decision mattered more than any other:

"the single most important determining factor to getting to product market fit is actually who you choose as your co-founder." — Chris Ellis, Thatch

They also both lost parents to cancer too early, which is why the company was always going to be in healthcare.

The courtship took months and was almost entirely in writing. On their first call, Ellis could hear Stevenson typing and assumed he was distracted by email.

"It turns out he wasn't sending emails, he was typing these like rigorous pages of pages of notes in our conversation." — Chris Ellis, Thatch

"I remember like a month in, he sent me this, you know, a hundred page personality questionnaire and assess for compatibility." — Chris Ellis, Thatch

Roughly six months in, after a hiking weekend in Utah, Stevenson asked if he wanted to do it. Ellis quit his job the following Monday.

How much has Thatch raised?

• Friends and family angel round first, then a seed round of roughly $5–6 million closed about three months after they quit, in the boom conditions of early 2021.
• Series A: $38 million, announced September 2024, led by Index Ventures and General Catalyst, with SemperVirens, The General Partnership, Andreessen Horowitz and Avid Ventures.
• A further $40 million raise was reported by TechCrunch in April 2025.

The uncomfortable detail is what sat between the seed and the Series A: two and a half years with almost no revenue.

"we conducted a bunch of user interviews and found that there wasn't really that much demand for the thing that we were building, which was kind of more patient trial matching." — Chris Ellis, Thatch

That realization came weeks after closing the seed round.

The product that flopped, and the vague TechCrunch launch that saved them

The first pivot was into healthcare payment rails — health savings accounts and flexible spending accounts. They built it through 2022.

"we built the HSA and we actually launched it in 23. It was a total flop, nobody wanted it." — Chris Ellis, Thatch

ICHRA arrived through a conversation, not a strategy deck. Ellis was taking every call he could get.

"I believe in maximizing the surface area of luck. And that means trying to talk to as many people as possible." — Chris Ellis, Thatch

Someone asked whether the technology they were building could be used for this new ICHRA law. Ellis had not heard of it. When he researched it, it mapped directly onto the pain he had heard in every customer interview — and onto his own company's experience of picking a Texas-based plan that made a new hire in San Francisco and another in New York miserable.

Then came the move worth studying. Thatch had a TechCrunch piece lined up to announce the HSA product. They ran it anyway, deliberately vague — "empowering startups to offer health benefits" — with language that left room for the new idea. Over the weekend before publication, Stevenson prototyped the ICHRA product. None of the buttons worked.

Key stat: the piece produced at least 100 demo requests. On the first day of demos, of roughly eight or nine people, about seven wanted the ICHRA product and one wanted the HSA.

"you can almost always get 80% of the signal from 20% of the work." — Chris Ellis, Thatch

The forcing function: open enrollment

US health insurance has a hard seasonal deadline. Open enrollment runs from November into December, and missing it costs a full year of learning. Thatch committed to launching into open enrollment 2023.

Key stat: from zero customers, Thatch onboarded roughly 100 companies and about $500K in run rate in about a month.

Ellis is unusually clear about why the deadline helped, and it is not about urgency theatre:

"one of the things that can hurt startups when they're getting off the ground is they don't really have any externally imposed deadlines." — Chris Ellis, Thatch

The launch was not clean. They found every sharp edge in the product and spent months apologising to CEOs of companies they had just onboarded. His read on that:

"if your customers care enough to complain and get you on a call or rake you over the coals, it means you're onto something, right?" — Chris Ellis, Thatch

A year later they had kept the vast majority of those customers.

2024: the year distribution got solved

If 2023 was product iteration, 2024 was go-to-market iteration — and most of it failed. Thatch ran TikTok and Facebook ads that did nothing.

What worked was recognising where health insurance is already distributed: payroll companies and insurance brokers. Rather than fight them, Thatch built to plug into them, exposing its infrastructure as an API — work made possible by having a team full of ex-Stripe engineers.

Key stat: a distribution partnership with QuickBooks and Allstate drove over 100 companies in a couple of months.

By the time of the interview, Thatch was at roughly 1,000 companies and tens of thousands of covered employees, having gone from effectively zero in about a year. Because the business is seasonal, most of that lands in the two months of open enrollment — which is why Ellis's revenue chart looks like a vertical line rather than a hockey stick.

Asked when he felt he had product market fit, Ellis relayed Ben Horowitz's answer over lunch: in B2B there is no single moment. It looks like a sawtooth — you get it with one segment, then have to earn it again with the next.

Key lessons from Chris Ellis's playbook

1. Pick the co-founder like you are picking a co-parent. Months of long-form written exchange, a compatibility questionnaire and a trip before either quit. Ellis puts this above every other factor. 2. Get 80% of the signal from 20% of the work. A vaguely worded launch piece plus a clickable prototype tested a product that did not exist — and produced 100 demo requests. 3. Leave optionality in your announcements. The genie does not go back in the bottle, so the copy was written loosely enough to cover the pivot they had not committed to yet. 4. Borrow an external deadline. Open enrollment did what no internal OKR could: it forced the team to cut scope and ship. 5. Complaints are a buy signal. Customers who leave quietly are the bad outcome. 6. Trust customers over experts. Brokerage and insurance executives told Ellis the economics did not work and the only buyers would be cash-strapped rural small businesses. Then a dog trainer in rural Texas spent 20 minutes telling him how badly he needed it.

"VCs are all kind of like art critics where they know what greatness looks like." — Chris Ellis, Thatch

"the validation is much more important when it comes from customers than when it comes from experts." — Chris Ellis, Thatch

"believing in something that nobody else does, helps you to achieve something that nobody else can." — Chris Ellis, Thatch

7. A mission is a decision-making tool, not a poster. Investors and advisors pushed Thatch to add payroll for the margin and the ARR. Ellis declined because it did not get the company closer to a healthcare system people love.

For related stories on founders building in regulated, incumbent-heavy markets, see Flo Health's path to a $1B valuation, Neo Financial taking on Canada's banks and Super.com's pivot to $150M in revenue.

FAQ: Thatch

Q: What is Thatch? A: Thatch is a health benefits platform built on ICHRA. Employers give each employee a budget of tax-free money, and employees choose their own health insurance plan and pay other qualifying healthcare costs with it. Thatch handles enrollment, payments, reimbursement and payroll reporting.

Q: Who is the CEO of Thatch? A: Chris Ellis, who co-founded the company in 2021 with Adam Stevenson. Ellis was a cancer researcher with an advanced science degree from MIT before moving into technology; Stevenson was an early Stripe engineer.

Q: How much funding has Thatch raised? A: A seed round of roughly $5–6 million in early 2021, a $38 million Series A announced in September 2024 led by Index Ventures and General Catalyst, and a further $40 million reported by TechCrunch in April 2025.

Q: Who are Thatch's investors? A: Index Ventures and General Catalyst led the Series A, joined by SemperVirens, The General Partnership, Andreessen Horowitz and Avid Ventures.

Q: What is ICHRA? A: The Individual Coverage Health Reimbursement Arrangement, a US law that lets employers make tax-free contributions employees can use to buy their own individual health insurance, instead of the employer selecting a single group plan.

Q: How big is Thatch? A: At the time of the interview, roughly 1,000 companies and tens of thousands of employees, reached in about a year from effectively zero.

Sources: Listen to the Full Founder Story

• Chris Ellis, Co-Founder & CEO of Thatch — spent two and a half years with almost no revenue, launched a product that flopped, then found ICHRA and went from zero to a $38M Series A in roughly a year.

Listen to the full interview: This 1st-time founder raised a $38M Series A — after taking over 2 years to launch.

Listen to the full episode at pmf.show for the complete story.

Last updated: September 2026