Why We Invested in Tendo

7 Minute Read   |   Contributor: Chris Angelatos

Earlier this year, we led a $20M growth capital financing in Tendo, a leading HealthTech software company transforming healthcare access and quality. Backed by top venture capital funds General Catalyst and Lux Capital, the company has achieved impressive scale across two key solutions: Tendo Insights and Tendo Marketplace, and is well-positioned for rapid future organic and inorganic growth. Vistara’s funding will support Tendo’s expansion, enabling the company to continue enhancing its technology, scaling operations, and furthering its impact on healthcare access, quality, and transparency. Championed by our HealthTech sector lead, Chris Angelatos, this investment underscores Vistara’s domain expertise and establishment of HealthTech as a key focus area. We are continuing to actively seek out and back companies driving meaningful innovation across the sector.

More importantly, why are we so excited about the future of Tendo? TL;DR version below, but we encourage everyone to explore the full investment thesis.

TL;DR

• Proven product-market fit with scale across both Insights and Marketplace platforms and blue-chip customers, including top health systems and academic medical centers, and partnerships with leading care navigators
• Strong market tailwinds by capitalizing on two of the largest healthcare trends in the shift to value-based care (100% adoption target by 2030) and self-funded employer healthcare (65% of employees and growing)
• Deep competitive moats, including patent portfolio and proven, proprietary algorithms
• Strategic, blue-chip equity sponsors in General Catalyst and Lux Capital
• Exceptional leadership in founders Dan Goldsmith and Jen Goldsmith, who bring deep healthcare and operating experience from C-suite roles at Veeva and Instructure

Scroll below to explore the full investment thesis.

Re-Architecting Healthcare 2.0

Since inception, Tendo’s vision has been to re-invent what is widely described as a broken healthcare system by becoming the trusted connection between patients, providers, and caregivers. The US spends >$4T per year on healthcare, nearly 20% of its GDP, by far the highest proportion of any OECD country (OECD). Despite the massive spending, healthcare outcomes continue to deteriorate as a staggering 60% of US adults now report at least one chronic condition (CDC). As the population continues to become older and sicker, demands on the healthcare system will continue to increase. To ensure that standards of care quality and access can be maintained without bankrupting the system, business model and technology innovations are required. Healthcare today faces challenges where price, availability, and quality of services are opaque, technology platforms are disconnected, costs are rising uncontrollably, and incentives are misaligned. Enter: Tendo.

Tendo is focused on enabling two key trends within healthcare that represent paths to reducing costs and improving care quality: self-funded employer healthcare and value-based care.

• Self-Funded Employer Healthcare: Traditional commercial health insurance is becoming a source of growing cost and complexity, and employers are seeking pathways and partners to save – currently, 65% of employees in the US are now on self-insured healthcare benefits models, and this percentage is growing.
  • Self-insured plans involve employers assuming all financial risk for providing benefit to employees, rather than paying a fixed premium to a health insurance carrier for employee medical expenses. This allows for more flexibility and potentially cost savings, but carries financial risk and administrative burden
• Value-Based Care: The Center for Medicare and Medicaid Services has a stated goal to shift to 100% value-based care arrangements for Medicare beneficiaries by 2030 (i.e., pay for performance vs pay for activity; current adoption of value-based care under Traditional Medicare is 53% as of January 2025, CMS) which has resulted in an explosion of focus on care quality and cost savings. Care quality rankings are published and publicly available for substantially all US hospitals, and these are driving meaningful impacts on financial performance.

Marketplace: Simplifying Healthcare

Tendo’s Marketplace platform is focused on simplifying healthcare through enabling direct contracting at scale between employers and providers (hospitals, clinics, etc.). Tendo’s Marketplace provides healthcare providers with a one-to-many platform to list shoppable, bundled healthcare procedures ranging from simple imaging to complex surgeries for purchase by the self-insured employer market, with transparent pricing and care quality (powered by Insights – see below) visible to employees and care navigators. Hospitals are a business like any other and need to generate demand. As the source of demand shifts towards a much more fragmented employer landscape, health systems need an efficient way to access that market, and this is becoming especially important as health system margins have compressed significantly following the COVID pandemic. Without a platform like Tendo, hospitals need to take a highly manual “many-to-many” approach, whereas a marketplace like Tendo enables a “one-to-many” approach and supports direct contracting at scale. During our diligence process, we spoke with several health systems directly about the growing influence of self-insured employer healthcare and in response, health systems are standing up business development teams to ensure they retain procedure volume – the Marketplace therefore fills a crucial channel partner role while also providing qualitative benefits supporting their reputation and commitment to improving healthcare access.

Every stakeholder benefits here:

• Patients: Easy access to quality care with no surprise bills and reduced costs
• Employers: 20-40% healthcare savings and improved access to quality care
• Providers: Reduced administrative burden, patient growth, and improved revenue

Powering this is a massive provider network: Tendo’s Marketplace has nearly 150K shoppable offers across nearly 7,000 nationwide clinical locations and is a one-stop shop for all specialties of interest. This is a key part of the product differentiation. To attract Fortune 500 employers to the platform, you need to be able to meet their employees where they are. Beyond geography, supplying the right type of care at the highest quality is also crucial, which is why Tendo’s announcement of their partnership with OrthoForum was so compelling (read press release here), as this adds high-quality orthopedic care to the platform, a therapeutic area that drives significant cost for employers. Building this depth and breadth of supply is incredibly difficult and creates a strong moat for Tendo.

And, they’ve built a deep feature toolbox, making the process simple and scalable. Many of the procedures on the Marketplace are highly complex, involving many different healthcare providers, locations, and payments. Bundling all of this into a shoppable item, and then correctly distributing payment when purchased is no simple task, and Tendo has broad IP, including multiple patents around this process. This massively reduces friction for both the employer and health system – the employer can make one payment instead of multiple, and the health system doesn’t have to manually distribute the funds (think about how many people and processes touch a knee surgery, for example).

We’re excited to support Tendo as they scale the Marketplace to be the infrastructure layer connecting health systems to employer-sponsored healthcare, and continue their mission to reduce cost and improve access for millions of Americans. As total US healthcare spending continues to scale past $4T (yes, trillion), Tendo has a massive market opportunity ahead.

Insights: Driving Quality

As the healthcare market continues its implacable shift from fee-for-service to value-based care, delivering high-quality care is becoming increasingly important and financially impactful, while at the same time, quality frameworks are becoming increasingly complex and obtuse. Quality rankings are regularly published by groups like the Center for Medicare & Medicaid Services (CMS), US News, and Vizient, and health systems are struggling to keep up with accurate provider documentation. For health systems, constantly changing quality frameworks with obtuse calculations are leading to unfair penalties, missed quality-based financial incentives, and difficulty in recruiting physicians; these are massive pain points given ongoing margin compression and labour shortages that health systems are facing today.

Whether documentation or care quality related, Tendo’s Insights platform shines at identifying quality and reimbursement issues. Tendo is able to deconstruct and synthesize all major quality ranking publication models, pinpoint specific documentation components negatively impacting scores, develop and deploy a strategic action plan, track improvements, and forecast future quality scores.

Most importantly, it works – Tendo’s Insights is proven to improve quality rankings in as little as a single quarter, enhancing workflows and outcomes for not only the clinical documentation improvement (CDI) teams but also clinicians and the C-suite. Tendo’s customer base includes leading academic medical centers, and even for these already prestigious organizations, the platform is able to move them meaningfully up the quality rankings.

We heard from multiple customers during our diligence process about how complex and variable quality and risk adjustment guidelines are – actual clinical performance is often dwarfed by how well a health system can capture clinical risk, a demoralizing thought for health system leaders. While Insights is in relatively early innings, industry experts shared that CDI competitors don’t come close to Insights in clinical risk capture, which is becoming increasingly important in a value-based care environment, and drove our excitement to invest.

The Insights platform ensures hospitals are getting fair credit for the quality care they are providing and allows them to be appropriately compensated. By improving financial and operational performance, hospitals can continue to support a wide range of critical services and reduce staffing pressure and burnout.

Vistara’s Partnership: Delivering Impact Across the Healthcare Landscape

With our capital, Tendo will be able to dramatically accelerate efforts across product development, go-to-market, partnerships, and more as they work to reimagine the healthcare system, and we’re looking forward to supporting the next phase of growth and impact.

We could not be more excited about the opportunity to partner with founders Dan Goldsmith and Jen Goldsmith. Extremely highly regarded operators and entrepreneurs, they come from leadership roles at leading software and HealthTech companies Instructure and Veeva. From our first conversation with them, we could see their dedication to achieving a highly ambitious vision of dramatically improving the US healthcare system. In addition to the high-upside products we’ve already described, they’ve built an incredible culture and high-performing management team. All of this was recognized early on by leading venture investors General Catalyst and Lux Capital, who we are eagerly joining as investors in the company.