Honor Reaches Unicorn Status with $370M Funding

The Growing Need for In-Home Senior Care

Providing care for aging loved ones is often a delicate matter. Many seniors, while requiring assistance, aren't yet at a stage necessitating the comprehensive, 24/7 support offered by nursing facilities.

A significant number of older adults prioritize maintaining their independence and dignity as they age, even as their capacity to perform everyday tasks diminishes.

Whether living independently, with a spouse, or alongside family, navigating the available options for in-home care can be a complex undertaking for those in need.

Honor Technology: A New Approach to Senior Care

Seth Sternberg established Honor Technology Inc. following the sale of his chat service, Meebo, to Google for approximately $100 million in 2012. Sternberg’s experience at Google was followed by personal care challenges with his mother.

“That experience sparked my interest in finding solutions for older adults,” Sternberg explains. “Upon investigating how society provides care for seniors, it became clear that the system is largely fragmented and disorganized. Individuals often struggle to know where to begin, leading us to focus on the non-medical home care sector.”

Significant Funding and Expansion

Honor, headquartered in San Francisco, recently announced a funding round consisting of $70 million in Series E equity financing and $300 million in debt financing. This brings the company’s valuation to over $1.25 billion, a substantial increase from its $810 million valuation during the $140 million Series D funding round in October 2020.

Baillie Gifford spearheaded the latest equity financing, bringing Honor’s total equity raised since its 2014 founding to $325 million.

This funding announcement follows Honor’s recent acquisition of global home care provider Home Instead, significantly expanding its senior care network. While the purchase price remains undisclosed, a joint press release stated that the combined organization generates over $2.1 billion in annual home care service revenue, establishing it as a leading entity within the projected $500 billion home care industry.

In addition to existing investors like T. Rowe Price Associates Inc., Prosus Ventures, Andreessen Horowitz (a16z), Thrive Capital, FMZ Ventures, Rock Springs Capital, Lighthouse Capital Markets, and TriplePoint Capital, the latest funding round also included contributions from the founders of Home Instead, Paul and Lori Hogan.

Perceptive Advisors led the debt financing, with a “significant” commitment from Ares Management funds.

Sternberg stated, “Our strong performance, coupled with our new size and scale, made debt financing a more cost-effective option than equity financing, prompting us to pursue this route for growth capital.”

Growth and Service Expansion

Since its Series D funding in October 2020, Honor has significantly increased its workforce, adding numerous caregivers – referred to as “Care Pros” – and broadened its care delivery platform to four additional states.

The acquisition of Home Instead, a franchisor of personalized in-home care services, now enables Honor to serve over 100,000 older adults globally each month, providing more than 80 million hours of care annually, according to Sternberg.

The company’s care professionals provide assistance with ADLs (activities of daily living), including bathing, dressing, and feeding. Care Pros typically spend around 20 hours per week in a client’s home.

Honor was recognized as a “best startup of the year” at Disrupt in 2015, shortly after its launch, at a time when technology was rarely applied to support older adults, as Sternberg recalls.

Initially, Honor aimed to connect seniors with qualified professionals for in-home care while providing families with the necessary information to stay informed about their loved one’s care.

In 2016, the company transitioned its model to employ care providers directly, offering benefits rather than relying on contractors. This shift was intended to foster greater loyalty and continuity of care by prioritizing the well-being of its care professionals.

Prior to the Home Instead acquisition, Honor operated in a limited number of markets, serving eight states.

“We were expanding market by market,” Sternberg said. “The acquisition of Home Instead provides us with a nationwide presence.”

The company intends to allocate its new capital to further develop its technology and integrate it across the Home Instead network. Honor co-founder and CTO Sandy Jen notes plans to triple the size of the engineering and product teams within the next year.

A Large and Fragmented Market

The senior care market is substantial and highly fragmented, estimated at over $80 billion annually, with $50 billion concentrated in the U.S. alone.

Honor’s platform focuses on matching “the right caregivers with the right clients” based on a variety of personalized criteria. It also streamlines caregiver recruitment, training, scheduling, and performance evaluation.

According to Sternberg, the technology improves with scale, leveraging expanding data to optimize performance. This tech-driven approach enhances the relationships between caregivers and clients, streamlines operations, centralizes care, and reduces turnover, ultimately improving Honor’s and Home Instead’s ability to meet increasing demand.

In 2017, Honor began offering its operating system to other home health care agencies, branding them as “powered by Honor.”

Addressing Industry Challenges

Anika Penn, an investment researcher at Baillie Gifford, believes that the current delivery of home care often leads to misalignments.

She points out that traditional senior home care options frequently lack transparency.

“Customers often lack visibility into the details of each visit, caregivers are uncertain about their work hours, and companies struggle to predict caregiver availability in specific regions,” Penn explained.

Inefficiencies related to paper records and manual scheduling also contribute to delays in processing payments and scheduling.

“This creates anxiety for all parties involved,” she added.

Penn’s firm invested in Honor because its technology and operational platform, combined with the expanded reach through the Home Instead network, “introduces consistency, trust, and excellence to an industry that urgently needs it,” she stated.