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Ascend raises $5.5M to provide a BNPL option for commercial insurance
Ascend on Wednesday announced a $5.5 million seed round to further its insurance payments platform that combines financing, collections and payables.
First Round Capital led the round and was joined by Susa Ventures, FirstMark Capital, Box Group and a group of angel investors, including Coalition CEO Joshua Motta, Newfront Insurance executives Spike Lipkin and Gordon Wintrob, Vouch Insurance CEO Sam Hodges, Layr Insurance CEO Phillip Naples, Anzen Insurance CEO Max Bruner, Counterpart Insurance CEO Tanner Hackett, former Bunker Insurance CEO Chad Nitschke, SageSure executive Paul VanderMarck, Instacart co-founders Max Mullen and Brandon Leonardo and Houseparty co-founder Ben Rubin.
This is the first funding for the company that is live in 20 states. It developed payments APIs to automate end-to-end insurance payments and to offer a buy now, pay later financing option for distribution of commissions and carrier payables, something co-founder and co-CEO Andrew Wynn, said was rather unique to commercial insurance.
Wynn started the company in January 2021 with his co-founder Praveen Chekuri after working together at Instacart. They originally started Sheltr, which connected customers with trained maintenance professionals and was acquired by Hippo in 2019. While working with insurance companies they recognized how fast the insurance industry was modernizing, yet insurance sellers still struggled with customer experiences due to outdated payments processes. They started Ascend to solve that payments pain point.
The insurance industry is largely still operating on pen-and-paper — some 600 million paper checks are processed each year, Wynn said. He referred to insurance as a “spaghetti web of money movement” where payments can take up to 100 days to get to the insurance carrier from the customer as it makes its way through intermediaries. In addition, one of the only ways insurance companies can make a profit is by taking those hundreds of millions of dollars in payments and investing it.
Home and auto insurance can be broken up into payments, but the commercial side is not as customer friendly, Wynn said. Insurance is often paid in one lump sum annually, though, paying tens of thousands of dollars in one payment is not something every business customer can manage. Ascend is offering point-of-sale financing to enable insurance brokers to break up those commercial payments into monthly installments.
“Insurance carriers continue to focus on annual payments because they don’t have a choice,” he added. “They want all of their money up front so they can invest it. Our platform not only reduces the friction with payments by enabling customers to pay how they want to pay, but also helps carriers sell more insurance.”
Ascend app
Startups like Ascend aiming to disrupt the insurance industry are also attracting venture capital, with recent examples including Vouch and Marshmallow, which raised close to $100 million, while Insurify raised $100 million.
Wynn sees other companies doing verticalized payment software for other industries, like healthcare insurance, which he says is a “good sign for where the market is going.” This is where Wynn believes Ascend is competing, though some incumbents are offering premium financing, but not in the digital way Ascend is.
He intends to deploy the new funds into product development, go-to-market initiatives and new hires for its locations in New York and Palo Alto. He said the raise attracted a group of angel investors in the industry, who were looking for a product like this to help them sell more insurance versus building it from scratch.
Having only been around eight months, it is a bit early for Ascend to have some growth to discuss, but Wynn said the company signed its first customer in July and six more in the past month. The customers are big digital insurance brokerages and represent, together, $2.5 billion in premiums. He also expects to get licensed to operate as a full payment in processors in all states so the company can be in all 50 states by the end of the year.
The ultimate goal of the company is not to replace brokers, but to offer them the technology to be more efficient with their operations, Wynn said.
“Brokers are here to stay,” he added. “What will happen is that brokers who are tech-enabled will be able to serve customers nationally and run their business, collect payments, finance premiums and reduce backend operation friction.”
Bill Trenchard, partner at First Round Capital, met Wynn while he was still with Sheltr. He believes insurtech and fintech are following a similar story arc where disruptive companies are going to market with lower friction and better products and, being digital-first, are able to meet customers where they are.
By moving digital payments over to insurance, Ascend and others will lead the market, which is so big that there will be many opportunities for companies to be successful. The global commercial insurance market was valued at $692.33 billion in 2020, and expected to top $1 trillion by 2028.
Like other firms, First Round looks for team, product and market when it evaluates a potential investment and Trenchard said Ascend checked off those boxes. Not only did he like how quickly the team was moving to create momentum around themselves in terms of securing early pilots with customers, but also getting well known digital-first companies on board.
“The magic is in how to automate the underwriting, how to create a data moat and be a first mover — if you can do all three, that is great,” Trenchard said. “Instant approvals and using data to do a better job than others is a key advantage and is going to change how insurance is bought and sold.”
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UK’s Marshmallow raises $85M on a $1.25B valuation for its more inclusive, big-data take on car insurance
Marshmallow — a U.K.-based car insurance provider that has made a name for itself in the market by providing a new approach to car insurance aimed at using a wider set of data points and clever algorithms to net a more diverse set of customers and provide more competitive rates — is announcing a milestone today in its life as a startup, as well as in the bigger U.K. tech world.
The London company — co-founded by identical twins Oliver and Alexander Kent-Braham and David Goaté — has raised $85 million in a new round of funding. The Series B valuation is significant on two counts: it catapults Marshmallow to a “unicorn” valuation above $1 billion — specifically, $1.25 billion; and Marshmallow itself becomes one of a very small group of U.K. startups founded by Black people — Oliver and Alexander — to reach that figure.
(To be clear, Marshmallow describes itself as “the first UK unicorn to be founded by individuals that are Black or have Black heritage”, although I can think of at least one that preceded it: WorldRemit, which last month rebranded to Zepz, and is currently valued at $5 billion; co-founder and chairman Ismail Ahmed has been described as the most influential Black Briton.)
Regardless of whether Marshmallow is the first or one of the first, given the dearth of diversity in the U.K. technology industry, in particular in the upper ranks of it, it’s a notable detail worth pointing out, even as I hope that one day it will be less of a rarity.
Meanwhile, Marshmallow’s novel, big-data approach and successful traction in the market speak for themselves. When we covered the company’s most recent funding round before this — a $30 million raise in November 2020 — the startup was valued at $310 million. Now less than a year later, Marshmallow’s valuation has nearly quadrupled, and it has passed 100,000 policies sold in its home country, growing 100% over the last six months.
The plan now, Oliver told me in an interview, will be to deepen its relationships with customers, in part by providing more engagement to make them better drivers, but also potentially selling more services to them, too.
In this, the startup will be tapping into a new approach that other insurtech startups are taking as they rethink traditional insurance models, much like YuLife is positioning its life insurance products within a bigger wellness and personal improvement business. Currently, the average age of Marshmallow’s customers is 20 to 40, Oliver said — and there are thoughts of potentially new products aimed at even younger users. That means there is long-term value in improving loyalty and keeping those customers for many years to come.
Alongside that, Marshmallow will also use the funding to inch closer to its plan to expand to markets outside of the U.K. — a strategy that has been in the works for a while. Marshmallow talked up international expansion in its last round but has yet to announce which markets it will seek to tackle first.
Insurance — and in particular insurance startups — are often thought of together with fintech startups, not least because the two industries have a lot in common: they both operate in areas of assessing and mitigating risk and fraud; they are in many cases discretionary investments on the part of the customers; and they are both highly regulated and require watertight data protection for their users.
Perhaps because so much of the hard work is the same for both, it’s not uncommon to see services built to serve both sectors (FintechOS and Shift Technology being two examples), for fintech companies to dabble in insurance services, and so on.
But in reality, insurance — and specifically car insurance — has seen a massive impact from COVID-19 unique to that industry. Separate reports from EY and the Association of British Insurers noted that 2020 actually saw a lift for many car insurance companies: lockdowns meant that fewer people were driving, and therefore fewer were getting into accidents and making fewer claims.
2021, however, has been a different story: new pricing rules being put into place will likely see a number of providers tip into the red for the year. And the Chartered Insurance Institute points out that it will also be worth watching to see how the low use of cars in one year will impact use going forward: some car owners, especially in urban areas where keeping a car is expensive, will inevitably start to question whether they need to own and insure a car at all.
All of this, ironically, actually plays into the hand of a company like Marshmallow, which is providing a more flexible approach to customers who might otherwise be rejected by more traditional companies, or might be priced out of offerings from them. Interestingly, while neobanks have definitely spurred more traditional institutions to try to update their products to compete, the same hasn’t really happened in insurance — not yet, at least.
“We started with the idea of the power of data and using a wider range of resources [than incumbents], and using that in our pricing led us to be able to offer better rates to more people,” Oliver said, but that hasn’t led to Marshmallow seeing sharper competition from older incumbents. “They are big companies and stuck in their ways. These companies have been around for decades, some for centuries. Change is not happening quickly.”
That leaves a big opportunity for companies like Marshmallow and other newer players like Lemonade, Hippo and Jerry (not an insurance startup per se but also dabbling in the space), and a big opening for investors to back new ideas in an industry estimated to be worth $5 trillion.
“The traction the team has achieved demonstrates the demand for a new kind of insurance provider, one that focuses more on consumer experience and uses the latest technology and data to give fair prices,” said Eileen Burbidge, a partner at Passion Capital, in a statement. “We’ve been proud to support the team’s ambitions since the start, and now look forward to its next chapter in Europe as it continues its mission to change the industry for the better.”
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Indonesian D2C insurance marketplace Lifepal raises $9M Series A
Choosing an insurance policy is one of the most complicated financial decisions a person can make. Jakarta-based Lifepal wants to simplify the process for Indonesians with a marketplace that lets users compare policies from more than 50 providers, get help from licensed agents and file claims. The startup, which says it is the country’s largest direct-to-consumer insurance marketplace, announced today it has raised a $9 million Series A. The round was led by ProBatus Capital, a venture firm backed by Prudential Financial, with participation from Cathay Innovation and returning investors Insignia Venture Partners, ATM Capital and Hustle Fund.
Lifepal was founded in 2019 by former Lazada executives Giacomo Ficari and Nicolo Robba, along with Benny Fajarai and Reza Muhammed. The new funding brings its total raised to $12 million.
The marketplace’s partners currently offer about 300 policies for life, health, automotive, property and travel coverage. Ficari, who also co-founded neobank Aspire, told TechCrunch that Lifepal was created to make comparing, buying and claiming insurance as simple as shopping online.
“The same kind of experience a customer has today on a marketplace like Lazada—the convenience, all digital, fast delivery—we saw was lacking in insurance, which is still operating with offline, face-to-face agents like 20 to 30 years ago,” he said.
Indonesia’s insurance penetration rate is only about 3%, but the market is growing along with the country’s gross domestic product thanks to a larger middle-class. “We are really at a tipping point for GDP per capita and a lot of insurance carriers are focusing more on Indonesia,” said Ficari.
Other venture-backed insurtech startups tapping into this demand include Fuse, PasarPolis and Qoala. Both Qoala and PasarPolis focus on “micro-policies,” or inexpensive coverage for things like damaged devices. PasarPolis also partners with Gojek to offer health and accident insurance to drivers. Fuse, meanwhile, insurance specialists an online platform to run their businesses.
Lifepal takes a different approach because it doesn’t sell micro-policies, and its marketplace is for customers to purchase directly from providers, not through agents.
Based on Lifepal’s data, about 60% of its health and life insurance customers are buying coverage for the first time. On the other hand, many automotive insurance shoppers had policies before, but their coverage expired and they decided to shop online instead of going to an agent to get a new one.
Ficari said Lifepal’s target customers overlap with the investment apps that are gaining traction among Indonesia’s growing middle class (like Ajaib, Pluang and Pintu). Many of these apps provide educational content, since their customers are usually millennials investing for the first time, and Lifepal takes a similar approach. Its content side, called Lifepal Media, focuses on articles for people who are researching insurance policies and related topics like personal financial planning. The company says its site, including its blog, now has about 4 million monthly visitors, creating a funnel for its marketplace.
While one of Lifepal’s benefits is enabling people to compare policies on their own, many also rely on its customer support line, which is staffed by licensed insurance agents. In fact, Ficari said about 90% of its customers use it.
“What we realize is that insurance is complicated and it’s expensive,” said Ficari. “People want to take their time to think and they have a lot of questions, so we introduced good customer support.” He added Lifepal’s combination of enabling self-research while providing support is similar to the approach taken by PolicyBazaar in India, one of the country’s largest insurance aggregators.
To keep its business model scalable, Lifepal uses a recommendation engine that matches potential customers with policies and customer support representatives. It considers data points like budget (based on Lifepal’s research, its customers usually spend about 3% to 5% of their yearly income on insurance), age, gender, family composition and if they have purchased insurance before.
Lifepal’s investment from ProBatus will allow it to work with Assurance IQ, the insurance sales automation platform acquired by Prudential Financial two years ago.
In a statement, ProBatus Capital founder and managing partner Ramneek Gupta said Lifepal’s “three-pronged approach” (its educational content, online marketplace and live agents for customer support) has the “potential to change the way the Indonesian consumer buys insurance.”
Part of Lifepal’s funding will be used to build products to make it easier to claim policies. Upcoming products include Insurance Wallet, which will include an application process with support on how to claim a policy—for example, what car repair shop or hospital a customer should go to—and escalation if a claim is rejected. Another product, called Easy Claim, will automate the claim process.
“The goal is to stay end-to-end with the customer, from reading content, comparing policies, buying and then renewing and using them, so you really see people sticking around,” said Ficari.
Lifepal is Cathay Innovation’s third insurtech investment in the past 12 months. Investment director Rajive Keshup told TechCrunch in an email that it backed Lifepal because “the company grew phenomenally last year (12X) and is poised to beat its aggressive 2021 plan despite the proliferation of the COVID delta variant, accentuating the fact that Lifepal is very much on track to replicate the success of similar global models such as Assurance IQ (US) and PolicyBazaar (India).”
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Jerry raises $75M at a $450M valuation to build a car ownership ‘super app’
Just months after raising $28 million, Jerry announced today that it has raised $75 million in a Series C round that values the company at $450 million.
Existing backer Goodwater Capital doubled down on its investment in Jerry, leading the “oversubscribed” round. Bow Capital, Kamerra, Highland Capital Partners and Park West Asset Management also participated in the financing, which brings Jerry’s total raised to $132 million since its 2017 inception. Goodwater Capital also led the startup’s Series B earlier this year. Jerry’s new valuation is about “4x” that of the company at its Series B round, according to co-founder and CEO Art Agrawal.
“What factored into the current valuation is our annual recurring revenue, growing customer base and total addressable market,” he told TechCrunch, declining to be more specific about ARR other than to say it is growing “at a very fast rate.” He also said the company “continues to meet and exceed growth and revenue targets” with its first product, a service for comparing and buying car insurance. At the time of the company’s last raise, Agrawal said Jerry saw its revenue surge by “10x” in 2020 compared to 2019.
Jerry, which says it has evolved its model to a mobile-first car ownership “super app,” aims to save its customers time and money on car expenses. The Palo Alto-based startup launched its car insurance comparison service using artificial intelligence and machine learning in January 2019. It has quietly since amassed nearly 1 million customers across the United States as a licensed insurance broker.
“Today as a consumer, you have to go to multiple different places to deal with different things,” Agrawal said at the time of the company’s last raise. “Jerry is out to change that.”
The new funding round fuels the launch of the company’s “compare-and-buy” marketplaces in new verticals, including financing, repair, warranties, parking, maintenance and “additional money-saving services.” Although Jerry also offers a similar product for home insurance, its focus is on car ownership.
Agrawal told TechCrunch that the company is on track to triple last year’s policy sales, and that its policy sales volume makes Jerry the number one broker for a few of the top 10 insurance carriers.
“The U.S. auto insurance industry is an at least $250 billion market,” he added. “The market opportunity for our first auto financing service is $260 billion. As we enter more car expense categories, our total addressable market continues to grow.”
Image Credits: Jerry
“Access to reliable and affordable transportation is critical to economic empowerment,” said Rafi Syed, Jerry board member and general partner at Bow Capital, which also doubled down on its investment in the company. “Jerry is helping car owners make the most of every dollar they earn. While we see Jerry as an excellent technology investment showcasing the power of data in financial services, it’s also a high-performing investment in terms of the financial inclusion it supports.”
Goodwater Capital Partner Chi-Hua Chien said the firm’s recurring revenue model makes it stand out from lead generation-based car insurance comparison sites.
CEO Agrawal agrees, noting that Jerry’s high-performing annual recurring revenue model has made the company “attractive to investors” in addition to the fact that the startup “straddles” the auto, e-commerce, fintech and insurtech industries.
“We recognized those investment opportunities could drive our business faster and led to raising the round earlier than expected,” he told TechCrunch. “We’re eager to launch new categories to save customers time and money on auto expenses and the new investment shortens our time to market.”
Agrawal also believes Jerry is different from other auto-related marketplaces out there in that it aims to help consumers with various aspects of car ownership (from repair to maintenance to insurance to warranties), rather than just one. The company also believes it is set apart from competitors in that it doesn’t refer a consumer to an insurance carrier’s site so that they still have to do the work of signing up with them separately, for example. Rather, Jerry uses automation to give consumers customized quotes from more than 45 insurance carriers “in 45 seconds.” The consumers can then sign on to the new carrier via Jerry, which can then cancel former policies on their behalf.
Jerry makes recurring revenue from earning a percentage of the premium when a consumer purchases a policy on its site from carriers such as Progressive.
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Ethos picks up $100M at a $2.7B+ valuation for a big data platform to improve life insurance accessibility
More than half of the U.S. population has stayed away from considering life insurance because they believe it’s probably too expensive, and the most common way to buy it today is in person. A startup that’s built a platform that aims to break down those conventions and democratize the process by making life insurance (and the benefits of it) more accessible is today announcing significant funding to fuel its rapidly growing business.
Ethos, which uses more than 300,000 data points online to determine a person’s eligibility for life insurance policies, which are offered as either term or whole life packages starting at $8/month, has picked up $100 million from a single investor, SoftBank Vision Fund 2. Peter Colis, Ethos’s CEO and co-founder, said that the funding brings the startup’s valuation to over $2.7 billion.
This is a quick jump for the company: It was only two months ago that Ethos picked up a $200 million equity round at a valuation of just over $2 billion.
It has now raised $400 million to date and has amassed a very illustrious group of backers. In addition to SoftBank they include General Catalyst, Sequoia Capital, Accel, GV, Jay-Z’s Roc Nation, Glade Brook Capital Partners, Will Smith and Robert Downey Jr.
This latest injection of funding — which will be used to hire more people and continue to expand its product set into adjacent areas of insurance like critical illness coverage — was unsolicited, Colis said, but comes on the heels of very rapid growth.
Ethos — which is sold currently only in the U.S. across 49 states — has seen both revenues and user numbers grow by over 500% compared to a year ago, and it’s on track to issue some $20 billion in life insurance coverage this year. And it is approaching $100 million in annualized growth profit. Ethos itself is not yet profitable, Colis said.
There are a couple of trends going on that speak to a wide opportunity for Ethos at the moment.
The first of these is the current market climate: Globally we are still battling the COVID-19 global health pandemic, and one impact of that — in particular given how COVID-19 has not spared any age group or demographic — has been more awareness of our mortality. That inevitably leads at least some part of the population to considering something like life insurance coverage that might not have thought about it previously.
However, Colis is a little skeptical on the lasting impact of that particular trend. “We saw an initial surge of demand in the COVID period, but then it regressed back to normal,” he said in an interview. Those who were more inclined to think about life insurance around COVID-19 might have come around to considering it regardless: It was being driven, he said, by those with pre-existing health conditions going into the pandemic.
That, interestingly, brings up the second trend, which goes beyond our present circumstances, and Colis believes will have the more lasting impact.
While there have been a number of startups, and even incumbent providers, looking to rethink other areas of insurance such as car, health and property coverage, life insurance has been relatively untouched, especially in some markets like the U.S. Traditionally, someone taking out life insurance goes through a long vetting process, which is not all carried out online and can involve medical examinations and more, and yes, it can be expensive: The stereotype you might best know is that only wealthier people take out life insurance policies.
Much like companies in fintech that have rethought how loan applications (and payback terms) can be rethought and evaluated afresh using big data — pulling in a new range of information to form a picture of the applicant and the likelihood of default or not — Ethos is among the companies that is applying that same concept to a different problem. The end result is a much faster turnaround for applications, a considerably cheaper and more flexible offer (term life insurance lasts only as long as a person pays for it), and generally a lot more accessibility for everyone potentially interested. That pool of data is growing all the time.
“Every month, we get more intelligent,” said Colis.
There is also the matter of what Ethos is actually selling. The company itself is not an insurance provider but an “insuretech” — similar to how neobanks use APIs to integrate banking services that have been built by others, which they then wrap with their own customer service, personalization and more — Ethos integrates with third-party insurance underwriters, providing customer service, more efficient onboarding (no in-person medical exams for example) and personalization (both in packages and pricing) around them. Given how staid and hard it is to get more traditional policies, it’s essentially meant completely open water for Ethos in terms of finding and securing new customers.
Ethos’s rise comes at a time when we are seeing other startups approaching and rethinking life insurance also in the U.S. and further afield. Last week, YuLife in the U.K. raised a big round to further build out its own take on life insurance, which is to sell policies that are linked to an individual’s own health and wellness practices — the idea being that this will make you happier and give more reason to pay for a policy that otherwise feels like some dormant investment; but also that it could help you live longer (Sproutt is another also looking at how to emphasize the “life” aspect of life insurance). Others like DeadHappy and BIMA are, like Ethos, rethinking accessibility of life insurance for a wider set of demographics.
There are some signs that Ethos is catching on with its mission to expand that pool, not just grow business among the kind of users who might have already been considering and would have taken out life insurance policies. The startup said that more than 40% of its new policy holders in the first half of 2021 had incomes of $60,000 or less, and nearly 40% of new policy holders were under the age of 40. The professions of those customers also speak to that democratization: The top five occupations, it said, were homemaker, insurance agent, business owner, teacher and registered nurse.
That traction is likely one reason why SoftBank came knocking.
“Ethos is leveraging data and its vertically integrated tech stack to fundamentally transform life insurance in the U.S.,” said Munish Varma, managing partner at SoftBank Investment Advisers, in a statement. “Through a fast and user-friendly online application process, the company can accurately underwrite and insure a broad segment of customers quickly. We are excited to partner with Peter Colis and the exceptional team at Ethos.”
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How we built an AI unicorn in 6 years
Today, Tractable is worth $1 billion. Our AI is used by millions of people across the world to recover faster from road accidents, and it also helps recycle as many cars as Tesla puts on the road.
And yet six years ago, Tractable was just me and Raz (Razvan Ranca, CTO), two college grads coding in a basement. Here’s how we did it, and what we learned along the way.
Build upon a fresh technological breakthrough
In 2013, I was fortunate to get into artificial intelligence (more specifically, deep learning) six months before it blew up internationally. It started when I took a course on Coursera called “Machine learning with neural networks” by Geoffrey Hinton. It was like being love struck. Back then, to me AI was science fiction, like “The Terminator.”
Narrowly focusing on a branch of applied science that was undergoing a paradigm shift which hadn’t yet reached the business world changed everything.
But an article in the tech press said the academic field was amid a resurgence. As a result of 100x larger training data sets and 100x higher compute power becoming available by reprogramming GPUs (graphics cards), a huge leap in predictive performance had been attained in image classification a year earlier. This meant computers were starting to be able to understand what’s in an image — like humans do.
The next step was getting this technology into the real world. While at university — Imperial College London — teaming up with much more skilled people, we built a plant recognition app with deep learning. We walked our professor through Hyde Park, watching him take photos of flowers with the app and laughing from joy as the AI recognized the right plant species. This had previously been impossible.
I started spending every spare moment on image classification with deep learning. Still, no one was talking about it in the news — even Imperial’s computer vision lab wasn’t yet on it! I felt like I was in on a revolutionary secret.
Looking back, narrowly focusing on a branch of applied science undergoing a breakthrough paradigm shift that hadn’t yet reached the business world changed everything.
Search for complementary co-founders who will become your best friends
I’d previously been rejected from Entrepreneur First (EF), one of the world’s best incubators, for not knowing anything about tech. Having changed that, I applied again.
The last interview was a hackathon, where I met Raz. He was doing machine learning research at Cambridge, had topped EF’s technical test, and published papers on reconstructing shredded documents and on poker bots that could detect bluffs. His bare-bones webpage read: “I seek data-driven solutions to currently intractable problems.” Now that had a ring to it (and where we’d get the name for Tractable).
That hackathon, we coded all night. The morning after, he and I knew something special was happening between us. We moved in together and would spend years side by side, 24/7, from waking up to Pantera in the morning to coding marathons at night.
But we also wouldn’t have got where we are without Adrien (Cohen, president), who joined as our third co-founder right after our seed round. Adrien had previously co-founded Lazada, an online supermarket in South East Asia like Amazon and Alibaba, which sold to Alibaba for $1.5 billion. Adrien would teach us how to build a business, inspire trust and hire world-class talent.
Find potential customers early so you can work out market fit
Tractable started at EF with a head start — a paying customer. Our first use case was … plastic pipe welds.
It was as glamorous as it sounds. Pipes that carry water and natural gas to your home are made of plastic. They’re connected by welds (melt the two plastic ends, connect them, let them cool down and solidify again as one). Image classification AI could visually check people’s weld setups to ensure good quality. Most of all, it was real-world value for breakthrough AI.
And yet in the end, they — our only paying customer — stopped working with us, just as we were raising our first round of funding. That was rough. Luckily, the number of pipe weld inspections was too small a market to interest investors, so we explored other use cases — utilities, geology, dermatology and medical imaging.
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YuLife nabs $70M at a $346M valuation for its gamified, wellness-oriented approach to life insurance
Life insurance — financial protection you buy against your death — may not read like the liveliest of industries on paper. But a life insurance startup that believes it can turn that stigma around, by infusing the concept with gamification and a push toward wellness and health — and change the life insurance industry in the process — is today announcing significant funding, a sign of the traction it’s getting for its big ideas.
YuLife, a London startup that has built a new kind of life insurance concept — it incentivizes and rewards users to focus on their physical and mental health through a gamified interface — has raised $70 million in what is, to date, one of the largest Series Bs raised by an insurtech startup in Europe.
Led by Target Global, the round also included Eurazeo, Latitude and previous backers Creandum, Notion Capital, Anthemis, MMC Ventures, and OurCrowd. Sammy Rubin, YuLife’s CEO and founder, confirmed that the round values YuLife at $346 million (£250 million).
The company will be using the funding to continue expanding its business, build more products on its platform, and importantly continue to invest in the technology that it uses to run its service and determine how its policies should run.
“Our insurance is about helping people live healthier and longer lives,” Rubin said in an interview. “If we can help to reduce claims while incentivizing people to do that, it’s a win-win.” But it’s about more than that, he added. “We are building a new type of risk model where we are able to create new actuarial tables, which have not been updated in 200 years. Actually, I think smoker rates and how they’ve changed was the last update. So, most will just look at your age and whether you are a smoker and that’s it.”
YuLife is currently active only in the U.K. and is only sold directly to organizations, who in turn provide it to their employees. That business currently — which also includes income protection and critical illness cover — provides $15 billion of coverage and has seen 10x growth in the last year — a bumper one for life insurance policies, possibly for the worst reasons (hello, pandemic; goodbye, predicting what the future might look like). Customers include Capital One, Co-op, Curve, Havas Media, Severn Trent and Sodexo.
That $15 billion is just a drop in the bucket in an industry that is currently estimated to be worth some $2.2 trillion.
The company got its start on the back of a persistent problem that Rubin experienced at his previous insurance startup PruProtect (which is now called Vitality Life).
“Usually insurance benefits just sit on a shelf and never get used,” he said. YuLife set out to change that by making the policy “all about engagement.”
The app — built by veterans of the gaming industry — is designed around the concept of different environments, currently covering forest, ocean, desert and mountains, which YuLife collectively terms its “Yuniverse.” (This incidentally also became a template for the company’s HQ design in London.)
Within each of these environments, users are encouraged to walk, cycle, meditate and do other activities to get around their environments in a healthy way, while at the same time being able to compare their progress against other co-workers. There is a degree of personalization in everyone’s experience, in that one person leaning into one activity over another seems to produce different subsequent scenarios.
Along with this, users are offered discounts on third-party products to further engage with the game within YuLife, which could include a subscription to meditation app Calm, FitBit and Garmin devices, and more.
As users make their way through their worlds, they get rewards, in the form of something called YuCoins. The YuCoins can in turn be used to redeem vouchers from the likes of Amazon and Asos to buy things … consumerism being another way to improve happiness for some of us.
All of this sums up as more than just a policy aimed at giving people peace of mind for their families should they depart this world.
“Long term, it’s not just about health, it’s about lifestyle,” Rubin said.
It’s also about YuLife’s business: The various products that it offers are built around an affiliate model, so there is a business interest for the company around offering and seeing items purchased and redeemed. However, this is not essential to using the app as a policy holder.
The win-win theme runs strong, but so too does the fact that YuLife is taking a different approach altogether, in an industry where most of the “disruption” has up to now been more about how to buy life insurance, rather than reassessing what life insurance actually is. For others in the space doing just that, see DeadHappy, BIMA, and the Jay-Z-backed Ethos. That being said, it’s also not the only one tackling “lifestyle” as part of life insurance: Sproutt is another rethinking that area as well.
“YuLife is redefining life insurance, using the most innovative technologies to transform a largely traditional industry,” said Ben Kaminski, partner, Target Global, in a statement. “With health and well-being increasingly thrust into the limelight in the wake of COVID-19, YuLife is fundamentally changing insurance by incentivizing people to lead healthier lifestyles. YuLife is ideally positioned to build on its tenfold growth during the pandemic and lead the way in helping its clients respond to the challenges posed by an ever-changing working environment. We are very proud to partner with YuLife on its journey of becoming a global leader in life insurance.”
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Meet Super.mx, the Mexico City-based insurtech that raised $7.2M from VCs and unicorn execs
Super.mx, an insurtech startup based in Mexico City, has raised $7.2 million in a Series A round led by ALLVP.
Co-founded in 2019 by a trio of former insurance industry executives, Super.mx’s self-proclaimed mission is to design insurance for “the emerging Latin American middle class,” according to CEO Sebastian Villarreal.
“That means insurance that is easy to buy – it can be bought on a cell phone in minutes – and that pays quickly with no adjusters,” he said. The company has built its offering with proprietary models that are used both on the underwriting side to predict risk and on the claims side to make payments automatically.
Goodwater Capital, Kairos Angels and Bridge Partners also participated in the Series A round in addition to angels such as Joe Schmidt IV, vice president of business development at insurtech Ethos and former investor at Accel and Kyle Nakatsuji, founder and CEO of auto insurance startup Clearcover (and also a former VC). Better Tomorrow Ventures led Super.mx’s $2.4 million seed round, which also saw capital from 500 Startups Mexico, Village Global, Anthemis and Broadhaven Ventures, among others.
Unlike most insurtech startups in Latin America, Villarreal emphasizes that Super.mx is neither an aggregator nor a carrier. Instead, it’s an MGA, or managing general agent.
“This lets us have a ‘best of both worlds’ approach,” Villarreal said. “We handle the entire user experience just like a direct to consumer carrier, but with the breadth of product choice offered by an aggregator.”
That product choice includes property, natural disasters and life insurance. The company soon plans to expand to also offer health insurance.
The founding team brings a variety of insurance experience to the table. Villarreal previously co-founded Chicago-based Kin Insurance (which raised over $150 million in funding from the likes of Flourish Ventures, Commerce Ventures and QED Investors). He was also once head of auto product at Avant, a growth-stage company funded by General Atlantic and Tiger Global, among others.
With over two decades of insurance industry experience, Dario Luna once served as Mexico’s insurance regulator and helped develop Mexico’s disaster risk management strategy. Marco Ahedo has designed parametric insurance products for 19 Caribbean countries. He was also once a solvency expert for life and health insurance lines at MetLife, and has developed financial models for several P&C carriers.
Villarreal lived in the U.S. for a while before deciding to move back to Mexico, which he recognized was home to an “underinsurance problem.”
“That’s actually a very acute problem,” he said. “People in Latin America buy a lot less insurance than they do in the U.S., and people in Mexico, in particular, buy a lot less insurance than they do in other Latin countries.”
Some have blamed the lack of insurance coverage on the country’s culture but Super.mx operates under the belief that this notion is “total BS.”
“It’s not a cultural problem,” Villarreal said. “The problem is that the insurance products that exist in the market just suck. They’re super expensive. They’re really hard to buy, and they pay very little.”
Image Credits: Super.mx
So far, Super.mx has sold “thousands of policies” but is more focused now on increasing the number of products that it’s selling. The company started out by selling earthquake insurance before adding COVID insurance, and more recently, in April, it launched life insurance. Next, it’s going to offer property, renter’s and health insurance.
“It’s really a different strategy than what you would find in the U.S.,” Villarreal said. “In the U.S, when you look at insurtechs, it’s like everyone just does one thing, but here, it’s very different because when someone says ‘I want insurance,’ really what they’re saying is ‘Hey, something happened that makes me nervous that didn’t make me nervous before.’”
That something could be a new child, for example, that prompts a need for life insurance.
“What we’re trying to do is like Lemonade, Roots and Hippo or Kin all rolled into one,” he added. It’s a big, big play.”
Digital adoption in Mexico, and Latin America in general, has increased exponentially in recent years. The bigger hurdle for Super.mx, according to Villarreal, has less to do with technology and more to do with Mexicans getting over what he describes a “deep mistrust” based on bad experiences in the past.
“People are really distrustful and that’s a huge hurdle, but once you show them that you actually are different,” Villarreal told TechCrunch, “that you actually do things in a different way, you get this incredible emotional response.”
Eventually, Super.mx plans to outside of Mexico to other countries in Latin America.
ALLVP’s Federico Antoni said his Mexico City-based firm had been looking for a team building in this space “for years” before investing in Super.mx. The venture firm was impressed with the company’s technical knowledge and industry expertise. It was also drawn to their multi-product approach and “capacity to ship highly complex products to the market quickly” — both of which he believes are “unique” in the region.
Citing statistics from MAPFRE Economics, Antoni pointed out that globally, the insurance market has been growing over the last 10 years. During that time, Latin America expanded faster on average (4.4% vs. 2.4% worldwide), albeit with more volatility. Life insurance has been driving this growth, at 6.1%, over the period.
“Insurtech may be even bigger than fintech. Also, harder,” he told TechCrunch via email. “We knew the team to unlock the market potential would need to be highly competent and highly disruptive.”
Antoni said he is also convinced that Insurtech is the “next frontier” in financial inclusion in Latin America especially as digitization continues to increase.
“Providing risk coverage to individuals and businesses in the region, brings financial stability to families and unlocks economic potential for SMEs,” he said. “Moreover, the insurance incumbents have been unable to address a growing and underserved market.”
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Tractable raises $60M at a $1B valuation to make damage appraisals using AI
As the insurance industry adjusts to life in the 21st century (heh), an AI startup that has built computer vision tools to enable remote damage appraisals is announcing a significant round of growth funding.
Tractable, which works with automotive insurance companies to let users take and submit photos of damaged cars that are then “read” to make appraisals, has raised $60 million, a Series D that values Tractable at $1 billion, the company said.
Tractable says it works with more than 20 of the top 100 auto insurers in the world, and it has seen sales grow 600% in the last 24 months, which CEO Alex Dalyac told me translates as “well into eight figures of annual revenue.” He also told me that “we would have grown even faster if it weren’t for COVID.” People staying at home meant far fewer people on the roads, and fewer accidents.
Its business today is based mostly around car accident recovery — where users can take pictures using ordinary smartphone cameras, uploading pictures via a mobile web site (not typically an app).
But Tractable’s plan is to use some of the funding to expand deeper into areas adjacent to that: natural disaster recovery (specifically for appraising property damage), and used car appraisals. It will also use the investment to continue building out its technology, specifically to help build out better, AI-based techniques of processing and parsing pictures that are taken on smartphones — by their nature small in size.
Insight Partners and Georgian Partners co-led the round and it brings the total raised by the company to $115 million.
Dalyac, a deep learning researcher by training who co-founded the company with Razvan Ranca and Adrien Cohen, said that the “opportunity” (if you could call an accident that) Tractable has identified and built to fix is that it’s generally time-consuming and stressful to deal with an insurance company when you are also coping with a problem with your car.
And while a new generation of “insurtech” startups have emerged in recent years that are bringing more modern processes into the equation, typically the incumbent major insurance companies — the ones that Tractable targets — have lacked the technology to improve that process.
It’s not unlike the tension between fintech-fuelled neobanks and the incumbent banks, which are now scrambling to invest in more technology to catch up with the times.
“Getting into an accident can be anything from a hassle to trauma,” Dalyac said. “It can be devastating, and then the process for recovery is pretty damn slow. You’re dealing with so many touch points with your insurance, so many people that need to come and check things out again. It’s hard to keep track and know when things will truly be back to normal. Our belief is that that whole process can be 10 times faster, thanks to the breakthroughs in image classification.”
That process currently also extends not just to taking pictures for claims, but also to help figure out when a car is beyond repair, in which case which parts can be recycled and reused elsewhere, also using Tractable’s computer vision technology. Dalyac noted that this was a popular enough service in the last year that the company helped recycle as many cars “as Tesla sold in 2019.”
Customers that have integrated with Tractable to date include Geico in the U.S., as well as a large swathe of insurers in Japan, specifically Tokio Marine Nichido, Mitsui Sumitomo, Aioi Nissay Dowa and Sompo. Covéa, the largest auto insurer in France, is also a customer, as is Admiral Seguros, the Spanish entity of U.K.’s Admiral Group, as well as Ageas, a top U.K. insurer.
Japan is the company’s biggest market today Dalyac said — the reason being that it has an aging population, but one that is also very strong on mobile usage: combining those two, “automation is more than a value add; it’s a must have,” Dalyac said. He also added that he thinks the U.S. will overtake Japan as Tractable’s biggest market soon.
The new directions into property and other car applications will also open the door to a wider set of use cases beyond working with insurance providers over time. It will also bring Tractable potentially into new competitive environments. There are other companies that have also identified this opportunity.
For example, Hover, which has built a way to create 3D imagery of homes using ordinary smartphone cameras, is also eyeing ways of selling its tech (originally developed to help make estimates on home repairs) to insurance companies.
For now, however, it sounds like the opportunity is a big enough one that the race is more to meet demand than it is to beat competitors to do so.
“Tractable’s accelerating growth at scale is a testament to the power and differentiation of their applied machine learning system, which continues to improve as more businesses adopt it,” said Lonne Jaffe, MD at Insight Partners and Tractable board member, in a statement. “We’re excited to double down on our partnership with Tractable as they work to help the world recover faster from accidents and disasters that affect hundreds of millions of lives.”
Emily Walsh, partner at Georgian Partners added: “Tractable’s industry-leading computer vision capabilities are continuing to fuel incredible customer ROI and growth for the firm. We’re excited to continue to partner with Tractable as they apply their artificial intelligence capabilities to new, multi-billion dollar market opportunities in the used vehicle and natural disaster recovery industries.”
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Fraud protection startup nSure AI raises $6.8M in seed funding
Fraud protection startup nSure AI has raised $6.8 million in seed funding, led by DisruptiveAI, Phoenix Insurance, AXA-backed venture builder Kamet, Moneta Seeds and private investors.
The round will help the company bolster the predictive AI and machine learning algorithms that power nSure AI’s “first of its kind” fraud protection platform. Prior to this round, the company received $550,000 in pre-seed funding from Kamet in March 2019.
The Tel Aviv-headquartered startup, which currently has 16 employees, provides fraud detection for high-risk digital goods, such as electronic gift cards, airline tickets, software and games. While most fraud detection tools analyze each online transaction in an attempt to decide which purchases to approve and decline, nSure AI’s risk engine leverages deep learning techniques to accurately identify fraudulent transactions.
NSure AI, which is backed by insurance company AXA, said it has a 98% approval rating on average for purchases, compared to an industry average of 80%, allowing retailers to recapture nearly $100 billion a year in revenue lost by declining legitimate customers. The company is so confident in its technology that it will accept liability for any fraudulent transaction allowed by the platform.
Founders Alex Zeltcer and Ziv Isaiah started the company after experiencing the unique challenges faced by retailers of digital assets. The first week of their online gift card business found that 40% of sales were fraudulent, resulting in chargebacks. The founders began to develop their own platform for supporting the sale of high-risk digital goods after no other fraud detection service met their needs.
Zeltcer, co-founder and chief executive, said the investment “enables us to register thousands of new merchants, who can feel confident selling higher-risk digital goods, without accepting fraud as a part of business.”
NSure AI, which currently monitors and manages millions of transactions every month, has approved close to $1 billion in volume since going live in 2019.
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