insurtech
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Startup insurance provider Vouch raises $90M, now valued at $550M
Vouch, a provider of business insurance to startups and high-growth companies, announced today it has raised $90 million in new funding.
The $90 million figure was raised across two rounds: a $60 million Series C co-led by SVB Capital (a subsidiary of Silicon Valley Bank) and Ribbit Capital that values the company at $550 million, and a previously unannounced $30 million Series B1 led by Redpoint Ventures.
With the latest financing, San Francisco-based Vouch has now raised a total of $160 million since its 2018 inception. Other investors include Allegis Group, Sound Ventures and SiriusPoint.
While there are many insurance technology companies out there that serve consumers, there are far fewer that offer it to companies, much less startups. Vouch describes itself as “a new kind of insurance platform” for startups that offers fully digital, “tailored coverage that takes minutes to activate.”
Over the past year, Vouch has seen impressive growth. The company declined to reveal hard revenue figures, but said it saw “7x” increase in its customer base year over year and currently protects over $5.7 billion in risk across thousands of policies. Today, Vouch has more than 1,600 clients, including Pipe, Middesk, Neighbor and Routable. It is also the “preferred” business insurance provider to the customers of Silicon Valley Bank, Brex, Carta and WeWork. Y Combinator too also refers Vouch to its portfolio companies.
To Vouch co-founder and CEO Sam Hodges, the ability to attract some of the highest-profile businesses in the startup world speaks to the company’s understanding of the startup ecosystem.
“It’s our responsibility to meet startup founders where they are, and give startups flexibility as they navigate changing laws, regulations and the virtual and physical locations of their businesses,” he said.
Like many other companies, Vouch had to shift its model during the pandemic to adapt to the different types of emerging risks businesses have faced. For example, last year, Vouch saw a change in where its startup clients’ teams were distributed. Before the pandemic, nearly 30% of the teams were remote. During the pandemic, that figure has shifted to over 53%. As a result, Vouch developed a broader range of insurance coverages to adapt to the “new normal.”
Included in its new line of proprietary products and services aimed at startups are: work from anywhere coverage, broader cyber coverages and embedded insurance. It also expanded its underwriting capabilities to serve early-stage to growth-market startups.
In particular, the work from anywhere coverage is in direct response to the pandemic-related shift in remote work and can insure up to $500,000 per occurrence and can include a specified property owned by a startup regardless of the location of that property.
One major differentiator for Vouch, said Hodges, is that it is now the only business insurance provider for startups that has its own insurance carrier, which means the company backs its own policies.
“This capability means we have a lot of control over how we build and underwrite our policies — which translates into superior coverage and a better experience for our clients,” he said.
Hodges co-founded Vouch with Travis Hedge three years ago after seeing how challenging it could be for a company to get the business insurance it needs to start and then scale.
The goal is to make it as easy as possible to onboard new customers and personalize the coverage as much as possible based on each company’s needs based on what they do, their customer base, stage of growth and the founder’s threshold for risk.
“A typical client can get a quote and bind their coverage online in under 10 minutes, without any phone calls or paperwork,” he told TechCrunch. “Vouch also has many coverage features that are uniquely geared for startups. For example, our directors and officers coverage includes a cap table coverage feature meant specifically to protect startups.”
Vouch looks at startups that need business insurance on a case by case basis, Hodges added.
For example, it asks questions like, “Does an e-commerce company handle a very limited amount of client-sensitive information?” If so, it could make sense that it has a lower cyber insurance coverage limit and pay less for its policy.
Conversely, if a startup is trying to raise money, it might need to invest more in Vouch’s directors and officers insurance to make sure it is covered should disputes arise in the future.
Looking ahead, Hodges said the new capital would go toward continued investment in technical capabilities, an expansion of its product offerings, more hiring and building embedded insurance for its partners.
With regard to the embedded capabilities, within the next 12 months, all of the company’s partners’ customers will be able to purchase Vouch insurance directly from those partners’ websites. Vouch’s headcount has more than doubled, from 55 employees in September 2020 to 125 full-time employees presently, and Hodges expects that will continue to grow.
Greg Becker, president and CEO of SVB Financial Group, said that Vouch’s mission aligns with SVB’s in that they both aim to “empower the innovation economy.”
“That’s what Vouch is doing today, helping startups and tech innovators mitigate their risks as they grow,” he wrote via email. “We are proud to co-lead Vouch’s latest funding round to give startups access to the insurance they need as they add headcount, increase their customer base, or raise funding rounds of their own.”
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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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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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Extra Crunch roundup: EU insurtech, 30 years of ‘Crossing the Chasm,’ embedded finance’s endgame
This morning, Anna Heim and Alex Wilhelm dug into the EU insurtech market, interviewing European VCs and collating the biggest recent rounds to take the temperature of the waters across the pond:
- Alex Timm, CEO, Root
- Dan Preston, CEO, MetroMile
- Luca Bocchio, partner, Accel
- Florian Graillot, investor, Astorya.vc
- Stephen Brittain, director and founder, Insurtech Gateway
Several European-based insurtech startups entered unicorn territory this year, such as Bought By Many, which offers pet insurance; London-based Zego; and Alan, a French startup that raised a $220 million round.
According to Brittain, EU startups in this sector are “still at the very early stages of innovation,” having only shown “a fraction of what’s possible” in a market that is “as large as banking.” Interestingly, he predicted that AI will play a larger role in the future as companies deploy it for fraud detection, improved customer experiences and processing claims more quickly.
“We are fully expecting the next generation of AI-driven business to unlock real-time risk analysis, pricing and claims resolution in the next few years,” he said.
Thanks very much for reading Extra Crunch; I hope you have a safe, relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
What do these 4 IPOs tell us about the state of the market?
Image Credits: Nigel Sussman (opens in a new window)
Earlier this week, The Exchange assessed the looming Monday.com IPO before reading the tea leaves about that flotation and three others to sum up the overall state of the market.
So what do the Marqeta, Monday.com, Zeta Global and 1stDibs debuts tell us? We may have been too conservative.
Toast’s Aman Narang and BVP’s Kent Bennett on how customer obsession is everything
Image Credits: Bessemer Venture Partners / Toast
On a recent episode of Extra Crunch Live, we spoke to Toast founder Aman Narang and Kent Bennett of Bessemer Venture Partners about how they came together for a deal, what makes the difference for both founders and investors when fundraising, and the biggest lessons they’ve learned so far.
The episode also featured the Extra Crunch Live Pitch-Off, where audience members pitched their products to Bennett and Narang and received live feedback.
Extra Crunch Live is open to everyone each Wednesday at 3 p.m. EDT/noon PDT, but only Extra Crunch members are able to stream these sessions afterward and watch previous shows on-demand in our episode library.
AI startup investment is on pace for a record year
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim solicited feedback from investors to get a temperature on the market for AI startup investments.
“The startup investing market is crowded, expensive and rapid-fire today as venture capitalists work to preempt one another, hoping to deploy funds into hot companies before their competitors,” they write. “The AI startup market may be even hotter than the average technology niche.”
But that’s not surprising. The Exchange was on it.
“In the wake of the Microsoft-Nuance deal, The Exchange reported that it would be reasonable to anticipate an even more active and competitive market for AI-powered startups,” Alex and Anna note. “Our thesis was that after Redmond dropped nearly $20 billion for the AI company, investors would have a fresh incentive to invest in upstarts with an AI focus or strong AI component; exits, especially large transactions, have a way of spurring investor interest in related companies.”
Their expectation is coming true: Investors reported a fierce market for AI startups.
Dear Sophie: What is a diversity green card and how do I apply for one?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I started a tech company about two years ago, and ever since I’ve dreamed of expanding my company in the United States.
I would love to have a green card. Someone mentioned that I should apply for a diversity green card. Would you please provide me with more details about it and how to apply?
— Technical in Tanzania
How to start a company in 4 days
Image Credits: MediaProduction (opens in a new window) / Getty Images
Pulley founder and three-time YC alum Yin Wu offers a tactical guide to getting a startup running in four days. Yes, just four days.
“The logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time,” Wu notes.
Read on for guidance on how to get your business going in less than a week.
Health clouds are set to play a key role in healthcare innovation
Image Credits: Natali_Mis / Getty Images
Innovaccer founder and CEO Abhinav Shashank and CTO Mike Sutten write in a guest column that the U.S. healthcare industry is in the middle of a massive transformation.
This shift, they write, “is being stimulated by federal mandates, technological innovation, and the need to improve clinical outcomes and communication between providers, patients and payers.”
Improving healthcare now means we need to process tremendous amounts of healthcare data. How do we do it? The cloud, which “plays a pivotal role in meeting the current needs of healthcare organizations.”
What SOSV’s Climate Tech 100 tells founders about investors in the space
Image Credits: MrJub / Getty Images
SOSV’s Benjamin Joffe and Meghan Hind round up a “who’s who” from the venture capital firm’s SOSV Climate Tech 100, a list of the best startups addressing climate change that SOSV has supported from the very beginning.
“What can founders learn from the list about climate tech investors? In other words, who invested in the Climate Tech 100?” they ask.
The fintech endgame: New supercompanies combine the best of software and financials
Image Credits: Donald Iain Smith (opens in a new window) / Getty Images
Now that we can transact from anywhere, a new, hybrid class of software companies with embedded financial services are scooping up consumers — and investors are following the action.
Using data from a Battery Ventures report about “the intersection of software and financial services,” this post examines why these companies can be so hard to value and offers a framework for better understanding their business models and investor appeal.
After 30 years, ‘Crossing the Chasm’ is due for a refresh
Image Credits: Grant Faint (opens in a new window) / Getty Images
Geoffrey Moore’s “Chasm,” a framework for marketing technology products that has been one of the canonical foundational concepts to product-market fit for three decades, needs a bit of an upgrade, Flybridge Capital’s Jeff Bussgang writes.
“I have been reflecting on why it is that we venture capitalists and founders keep making the same mistake over and over again — a mistake that has become even more glaring in recent years,” he writes.
Bussgang goes on to consider the Chasm — and propose tweaks for thinking about market size in the modern era.
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Insurtech is hot on both sides of the Atlantic
The U.S. insurance technology market is hot and has been for years now. Back in early 2020, to pick an example, TechCrunch reported on a wave of funding events among domestic insurtech marketplaces. Those companies have since gone on to raise hundreds of millions of dollars more.
And after a long period of incubation, we’ve seen neoinsurance players from the U.S. like Root and Metromile go public. Hippo is working to join the cohort.
The Exchange explores startups, markets and money.
Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.
So from the perspective of venture capital activity, startup growth and exits, insurtech is proving itself in the States. Even if growth remains the name of the game in insurance tech and profits are often scarce.
What about other markets? The recent Wefox round caught The Exchange’s eye. A $650 million insurtech round would have commanded our attention regardless of its location. But to see a European insurance technology startup raise that amount of cash made us wonder if there’s as much money present for the EU market’s insurtech startups as we’ve seen here in the U.S.
After all, with business-focused neoinsurance provider Embroker raising a big round this week in the United States, to pick an example, it seems that attacking the massive and antiquated insurance market is good startup sport. Why wouldn’t that concept apply to Europe?
To find out more, we got in touch with a number of VCs from Europe to hear their perspectives on what’s happening on the ground, including folks from Accel, Astorya.vc and Insurtech Gateway. To ground us, we collated the biggest recent rounds from the EU insurance technology market. Let’s go!
A quick note on insurtech exits
Venture capitalists and startup founders get paid when they generate an exit. Lately, exits in the space have featured a number of IPOs.
The older a startup gets, the more it has to deal with public-market investors. Crossover funds and the like make their appearance before unicorns go public. And then former startups have to pitch not the venture capital market, but the public markets. It’s a different game.
That’s the impression that The Exchange got chatting with the CEO of Root, Alex Timm, this earnings cycle. He noted that public tech-focused investors don’t always grok the insurance elements of his business, while insurance investors don’t always grok the tech side of Root.
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Meet Justos, the new Brazilian insurtech that just got backing from the CEOs of 7 unicorns
Here in the U.S. the concept of using a driver’s data to decide the cost of auto insurance premiums is not a new one.
But in markets like Brazil, the idea is still considered relatively novel. A new startup called Justos claims it will be the first Brazilian insurer to use drivers’ data to reward those who drive safely by offering “fairer” prices.
And now Justos has raised about $2.8 million in a seed round led by Kaszek, one of the largest and most active VC firms in Latin America. Big Bets also participated in the round, along with the CEOs of seven unicorns, including Assaf Wand, CEO and co-founder of Hippo Insurance; David Vélez, founder and CEO of Nubank; Carlos Garcia, founder and CEO of Kavak; Sergio Furio, founder and CEO of Creditas; Patrick Sigrist, founder of iFood and Fritz Lanman, CEO of ClassPass. (There’s a seventh CEO who wishes to remain anonymous). Senior executives from Robinhood, Stripe, Wise, Carta and Capital One also put money in the round.
Serial entrepreneurs Dhaval Chadha, Jorge Soto Moreno and Antonio Molins co-founded Justos, having most recently worked at various Silicon Valley-based companies including ClassPass, Netflix and Airbnb.
“While we have been friends for a while, it was a coincidence that all three of us were thinking about building something new in Latin America,” Chadha said. “We spent two months studying possible paths, talking to people and investors in the United States, Brazil and Mexico, until we came up with the idea of creating an insurance company that can modernize the sector, starting with auto insurance.”
Ultimately, the trio decided that the auto insurance market would be an ideal sector considering that in Brazil, an estimated more than 70% of cars are not insured.
The process to get insurance in the country, by any accounts, is a slow one. It takes up to 72 hours to receive initial coverage and two weeks to receive the final insurance policy. Insurers also take their time in resolving claims related to car damages and loss due to accidents, the entrepreneurs say. They also charge that pricing is often not fair or transparent.
Justos aims to improve the whole auto insurance process in Brazil by measuring the way people drive to help price their insurance policies. Similar to Root here in the U.S., Justos intends to collect users’ data through their mobile phones so that it can “more accurately and assertively price different types of risk.” This way, the startup claims it can offer plans that are up to 30% cheaper than traditional plans, and grant discounts each month, according to the driving patterns of the previous month of each customer.
“We measure how safely people drive using the sensors on their cell phones,” Chadha said. “This allows us to offer cheaper insurance to users who drive well, thereby reducing biases that are inherent in the pricing models used by traditional insurance companies.”
Justos also plans to use artificial intelligence and computerized vision to analyze and process claims more quickly and machine learning for image analysis and to create bots that help accelerate claims processing.
“We are building a design-driven, mobile first and customer experience that aims to revolutionize insurance in Brazil, similar to what Nubank did with banking,” Chadha told TechCrunch. “We will be eliminating any hidden fees, a lot of the small text and insurance-specific jargon that is very confusing for customers.”
Justos will offer its product directly to its customers as well as through distribution channels like banks and brokers.
“By going direct to consumer, we are able to acquire users cheaper than our competitors and give back the savings to our users in the form of cheaper prices,” Chadha said.
Customers will be able to buy insurance through Justos’ app, website or even WhatsApp. For now, the company is only adding potential customers to a waitlist but plans to begin selling policies later this year..
During the pandemic, the auto insurance sector in Brazil declined by 1%, according to Chadha, who believes that indicates “there is latent demand raring to go once things open up again.”
Justos has a social good component as well. Justos intends to cap its profits and give any leftover revenue back to nonprofit organizations.
The company also has an ambitious goal: to help make insurance become universally accessible around the world and the roads safer in general.
“People will face everyday risks with a greater sense of safety and adventure. Road accidents will reduce drastically as a result of incentives for safer driving, and the streets will be safer,” Chadha said. “People, rather than profits, will become the focus of the insurance industry.”
Justos plans to use its new capital to set up operations, such as forming partnerships with reinsurers and an insurance company for fronting, since it is starting as an MGA (managing general agent).
It’s also working on building out its products such as apps, its back end and internal operations tools, as well as designing all its processes for underwriting, claims and finance. Justos’ data science team is also building out its own pricing model.
The startup will be focused on Brazil, with plans to eventually expand within Latin America, then Iberia and Asia.
Kaszek’s Andy Young said his firm was impressed by the team’s previous experience and passion for what they’re building.
“It’s a huge space, ripe for innovation and this is the type of team that can take it to the next level,” Young told TechCrunch. “The team has taken an approach to building an insurance platform that blends being consumer-centric and data-driven to produce something that is not only cheaper and rewards safety but as the brand implies in Portuguese, is fairer.”
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