As a small business, the victories feel better, yet, the defeats hurt a lot more. One fiasco and you may find yourself in a legal situation that bigger companies are prepared for but your small company is not equipped to handle. So your best bet is to get business insurance coverage that can help you mitigate your risk while paying what you need. CoverWallet has you covered as you can easily monitor your insurance policy as well by by working with a company that understands your unique situation.
We spoke with cofounder Inaki Berenguer and received the inside scoop on what makes CoverWallet worth the a try.
Who were your investors and how much did you raise?
I cofounded the company in Sep 2015 with Rashmi Melgiri. We met when we were in business school at MIT, and she is one of the smartest, more hardworking and fun people I know. And we have raised ~$2M in Convertible Notes (pre-seed).
Tell us about your product or service.
CoverWallet is the easiest way to understand, buy and manage business insurance. From General Liability to Commercial Property we offer insurance for businesses such as restaurants, contractors, florists, or any company with less than 100 employees. We’re currently focused on SMBs, as we think that they are currently underserved.
What inspired you to start the company?
For a long time, I thought insurance was a rip-off in addition to being complex to understand, obtain and manage. This thought wasn’t helped by founding two companies and having to deal with insurance. I knew there needed to be a better way.
After doing my research, I learnt two things. First, that this a $1 Trillion market (!!). Second, that the concept of insurance is not a rip off. Ugly things happen to businesses, like fires, employee injuries or lawsuits. For instance, Tory Spelling recently filed a lawsuit against a small restaurant in CA after suffering a little burn. She claims damages related to medical expenses and wage losses. Luckily the restaurant has insurance and can stay in business. What business owners hate is dealing with insurance, not the underlying concept of it.
So I decided to build an insurance company that gets rid of the complexity and frustration, keep the good of insurance, and simplify the life of a business owner when it comes to dealing with the intricacies of insurance. With CoverWallet, business owners can have comfort and peace of mind, and focus on what matters: running their business.
How is it different?
We use data, design and online technologies to simplify the life of business owners when trying to understand, buy and manage their insurance. The reality is that there is not a good online insurance company for small businesses, nor do they receive concierge-style service that larger companies get. We make it easy to understand what an SMB might need, as well as give them a place to keep, share and manage their policies.
What market you are targeting and how big is it?
This is the exciting part.
- Insurance for businesses worldwide is $1+ Trillion.
- Insurance for businesses in the US is $300 Billion.
- Insurance for small businesses with less than 100 employees in the US is $100B.
On average, these small businesses may buy 3 or 4 policies per year, spending ~$6K/year across policies. Our goal is to target those small businesses that are currently underserved.
What’s the most important information for startups to keep in mind regarding insurance?
Insurance is a complex product and business owners don’t want to spend their time worrying about it; they just want to set it and forget it. However, it’s incredibly important for a business to get the appropriate coverage to protect them from lawsuits, employee injuries or property damages.
Unfortunately, there isn’t a one-size-fits-all insurance package for companies. For example, a restaurant owner needs to be covered against customers getting food poisoning while an accountant needs to coverage against potential calculation errors. The kind of insurance a company might need will depend on industry, geography and company size. The issue being that no insurance company is clearly communicating what a business needs, how much of it, or what you don’t need.
CoverWallet’s intelligent assessment system identifies the insurance you need based on your specific business, gets you a policy that fits your budget, and does it all in less time than you think.
What was the funding process like?
I was incredibly lucky because I already had a relationship with most investors, so it was very informal. Based on my previous relationships and track record, I was able to pick the smartest investors on the East Coast: Founder Collective, Two Sigma, and Highland Capital Partners. Although the meetings were informal, and the process was extremely fast, I took the process very seriously. When investors give you money, you need to take it seriously.
I also wanted to balance institutional investors with individual investors and advisors who could add value. We are fortunate to have the support of individuals like Amol Sarva (founder of Knotel, HaloNeuro and Peek), Paul English (founder of Lola and Kayak), Joan Lamm Tennant (insurance executive), Professor Ed Roberts (MIT), Adeyemi Ajao (founder of Tuenti and Identified), Jake Gibson (founder of Nerdwallet), Professor Jim Cash (Harvard), Andres Blank (Scout and Pixable), Alfonso Villanueva (head of strategy at Paypal), Luis Sanz (founder of Olapic), Jonathan Swanson (founder of Thumbtack), Scott Hartley (Venture Partner at Metamorphic), Christian Busch (marketing executive), Julio Bruno (Chairman Time Out), Jason Traff (founder of Leaky), or Alex Lintner (former President of Intuit and President of Experian) among others.
What are the biggest challenges that you faced while raising capital?
Fortunately, our current investors understand the challenges of building a company in new markets and asked the right questions and about the things that could go wrong. I know from some colleague entrepreneurs that they pitch to investors that ask the wrong questions or have the wrong concerns, which is frustrating.
What factors about your business led your investors to write the check?
The founding team -and how Rashmi and I complement each other- and size of the opportunity. Insurance for Businesses is one of the largest global industries and the timing to reshape it with technology seems right.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Control your burn rate and be laser focused on your next milestone. When the money in the bank is very limited, you cannot explore and experiment on multiple fronts. Think about it like this: you’re a scuba diver at the bottom of the sea with both limited air supply in your tank. Don’t get distracted by the corals or fish around you, even if they are pretty! Laser focus on achieving your mission and getting to the surface. Maybe later you can get more air and get back into the water to swim with the fishes.
Where do you see the company going now over the near term?
We are defining a new category in the insurance industry; we will need to continue recruiting the best talent and partnering with multiple industry stakeholders. We have partnerships with a handful of players in the space, and we will continue partnering with the right players to bring the best solutions to our customers. There is an opportunity to transform the industry and create value for everyone in the ecosystem: customers, existing insurance companies and us.
What’s your favorite restaurant in the city?
Joseph Leonard and Bobo in the West Village and Freemans in the Lower East Side, not to mention the quality of bagels from the coffee carts on almost every corner of NYC. They coffee carts aren’t the classiest of establishments, but they get the job done!
I have always been in love with New York City. I am from a small town in Spain close to the Mediterranean sea. The first time I visited New York in the 90s, I was in Times Square and was completely in awe. I said to myself: “One day, I will live here (in Times Square)”. When I moved to NY in 2009 after graduating from MIT, I moved into an apartment in Times Square; I loved it, but my girlfriend (now wife) didn’t like it that much and we moved to a different neighborhood. I still love and miss it.