- The insurance-tech startup Alaffia Health raised $5 million in seed funding led by Anthemis Group.
- Alaffia’s sibling founders were inspired by working in their family’s medical-billing company.
- They found a way to apply tech to the family business and get venture-capital backing to scale it.
Processing healthcare claims may not sound like a typical dream job. But for TJ Ademiluyi and Adun Akanni, it’s in their blood.
Their parents own a medical-billing company, and from a young age the brother-sister duo soaked up discussions about healthcare costs and how to make the system better.
“We grew up in the industry,” Akanni, 33, who is certified in medical billing and coding and has a master’s degree in public health, told Insider. “I’ve always known I was going to be in healthcare since I was younger.”
Yet she and Ademiluyi, 27, sought to make their own mark on the family business once they became adults. Now their insurance-tech startup, Alaffia Health, has raised $5 million in seed funding in a round led by Anthemis Group, the fintech-focused venture-capital firm that has backed Pipe, Carta, and Betterment.
Aperture Venture Capital, 1984 Ventures, Tau Ventures, Twine Ventures, Plug and Play Ventures, and the Entrepreneurs Roundtable Accelerator also participated in the startup’s seed round.
Alaffia Health hopes to help healthcare payers curb costs from medical-billing errors, fraud, and abuse. The National Health Care Anti-Fraud Association has cited estimates for the cost of improper claims in the US at $100 billion to $300 billion a year. Alaffia’s technology uses machine learning designed to spot and fix problems in healthcare claims before they’re paid out.
Having parents as small-business owners gave Ademiluyi and Akanni, who grew up in Columbia, Maryland, with three other siblings, an appetite for entrepreneurship. But it wasn’t always clear for Ademiluyi how that would take shape. While Akanni pursued a career in healthcare, he initially took a different track.
While attending the University of Maryland, Ademiluyi was an investor in the college’s student-run venture fund. After graduating in 2017, he took a job at Goldman Sachs in New York, eventually working with tech investments.
Through these experiences, Ademiluyi gained familiarity with the startup world, and he began to envision how he could scale up his family’s line of work. In 2020, he teamed up with his sister to launch Alaffia Health. They also enlisted another sister, a pharmacist, to join the fledgling startup.
The siblings realized that to pursue their ambitions, they needed outside funding. That summer, they got into the Entrepreneurs Roundtable Accelerator, one of New York’s longest-running programs for startups, whose alumni include Katapult and Thirty Madison. Through that program, they gained connections to investors such as Vinay Singh, a partner at Anthemis.
The timing of the startup’s launch ended up being fortuitous, as the issue of medical fraud, waste, and abuse has taken on greater prominence during the COVID-19 pandemic. The US Justice Department, for instance, announced earlier this month that it had recovered $5 billion in settlements related to false healthcare claims during the 2021 fiscal year. Ademiluyi told Insider that Alaffia’s revenue grew by 24 times in the past year.
Alaffia now has a team of 17 people distributed across the US. Ademiluyi, the company’s CEO, lives in New York, while Akanni, its chief operating officer, is based in Maryland.
Right now, Alaffia works largely with healthcare payers such as self-insured employers and third-party administrators. In the future, the company hopes to partner with healthcare providers as well.
Ademiluyi and Akanni told Insider they saw their startup as an opportunity to honor their parents’ work by broadening its impact through technology.
“The reason why we decided to found Alaffia is to take, in essence, the legacy version of what our family business has been doing and really take it to the next level,” Ademiluyi said.
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