Antonio Moraes, the grandson of a late prominent Brazilian billionaire, was never interested in joining the family-owned conglomerate of construction companies and a bank. Shortly after graduating from college, he founded one of Brazil’s first impact funds, which invested primarily in companies that made healthcare more accessible and affordable.

But while attending Stanford University, where Moraes received a master’s degree in business administration and healthcare policy, he realized that instead of investing in impactful companies, he wanted to start his own. 

As a part of an entrepreneurship class, Moraes and his co-founder, an engineering grad student, James Wong, visited multiple eyeglass manufacturing factories in China. They discovered that designer frames that sell for as much as $600 in the U.S. cost only about $10 to produce. “We thought there’s something very wrong with these markups,” Moraes told TechCrunch.

Because vision care and eyeglasses are expensive, many employees buy frames with their vision insurance, but the benefits typically don’t cover all the costs, Moraes said. “With vision insurance, people expect not to pay anything, but then they leave the optician’s office with a $300 out-of-pocket bill.” 

Moraes and Wong started XP Health in late 2018, but during the pandemic, they shifted the startup’s focus to a digital-first, AI-driven platform that offers employees eye exams and eyewear benefits at significantly lower costs than existing vision insurance plans. 

On Thursday, XP Health announced a $33.2 million Series B led by QED Investors with participation from Canvas Ventures, American Family Ventures, HC9 Ventures, Valor Capital Group and Manchester Story. The round comes less than two years after XP Health’s $17.1 million Series A. 

XP Health members who buy eyeglasses virtually can save as much as 69% off the retail price, Moraes said. The company claims not to mark up the frames or lenses sourced directly from factories in Asia. Instead, XP Health generates its revenue through recurring membership fees.  

“In many cases, our members pay $0 for a pair of high-quality designer frames with the best-in-class lenses, and for the eye exam as well,” Moraes said.  

XP Health’s AI-powered platform uses facial recognition to recommend glasses that fit the member’s style and face shape.  

Members can also buy glasses from physical eyewear retailers at a discount, but Moraes emphasized that a similar frame can cost as much as two to three times less if purchased from the company’s online platform.

Over the last two years, the company has expanded its business customer roster from 30 to over 3,000 business customers, including Docusign, Navistar, Chegg, and Sequoia Consulting, who offer XP Health as a benefit to their employees. XP Health also has formed strategic partnerships with insurance providers such as Guardian Life Insurance, which provides vision benefits to small businesses. 

Of course, XP Health is not the only company that’s taking out the middleman in eyewear. This is already a crowded market. Warby Parker sells directly to consumers as does Eyebuydirect, Firmoo, Pair Eyewear, and Zenni, to name a few other options. But Moraes claims XP Health is the only startup that’s taking on incumbent vision insurance providers, a market that’s dominated by VSP and EyeMed Vision Care. 

Yet, XP Health doesn’t consider itself to be an insurance company. That’s because what these companies offer is not insurance in a traditional sense. “There’s no real risk,” Moraes said. “It’s a corporate benefit.”