The first investors in Uber just broke from tradition to made their largest investment ever

By Biz Carson

First Round Capital has made small bets on companies that have paid off in big ways. It led Uber's seed round of founding. It's got money in Warby Parker, Uber, and Square.
However, the average investment for the venture capital firm is around $500,000. In the first time in the firm's decade-long history, First Round has gone above the mark and invested $4M in a company.

Partner Josh Kopelman and First Round are leading a $100 million Series A round in Clover Health, a company that's until now flown under the radar. Its closest competition is Oscar Health, an insurance company geared at millennials, that attracted money from Google.

It's a bet on the broken market of health insurance and startup that wants to fix Medicare Advantage, said Kopelman, a partner at First Round.

"We're a seed stage fund and for the last 10 years we've been pretty strongly disciplined toward focusing on seed stage," Kopelman told Business Insider. "This really is an exception for us, and it required an exceptional company."

Rather than going after that demographic, Clover is focused on Medicare Advantage, a plan that attracts the elderly and the disabled. Medicare Advantage is a Medicare plan, but can be offered by private companies, like Clover.

What sets Clover apart is its use of software on every level of care: it builds a team that maintains users profiles and can dispatch nurses on home visits, after a surgery for example, to make sure patients are following through on their instructions and feeling better.

The goal is to decrease hospital admissions and readmissions among the elderly by having your insurance company care about following up, and it's already had success lowering hospital admissions by nearly 50 percent, according to the company.

It's a hard area for venture capitalists to understand, and one that Kopelman felt comfortable betting big on once he realized what Clover was doing.

"It's a contrarian bet on insurance, and the more we got to understand the insurance company and specifically the Medicare Advantage space, we just realized that this is going to be a Fortune 50 company," Kopelman said.

There's a lot of money in startups these days, too, and Kopelman acknowledged part of the high round price was because of the "frothy" market conditions.

"We're definitely players in the market and the market is frothy right now. That said, this company has been around for two years," Kopelman said. "It's one thing to see a company that's three months old and steps off the stage at Demo Day and raises money at a premium price. This is clearly a premium round at a premium price but they also had demonstrable traction, results, and scale."

First Round Capital will be sticking to investing only in seed stage companies (and likely at a lower price tag) so it's not a permanent departure - although Kopelman admits the company also owns SecondRound.Com.

"It was a larger check than anything I've written before," Kopelman said.