With the thousands of pages in the Affordable Care Act, it should be no surprise that navigating the complexities of the insurance market is a convoluted and arduous process. CoverWallet is the simple solution for your businesses insurance need. The online insurance company brings the law down to a level that you can grasp and helps you maximize your company plan through an intuitive digital platform. Covering industries across the spectrum, CoverWallet empowers your small business insurance needs.
AlleyWatch chatted with COO and cofounder Rashmi Melgiri about the startup and their most recent round of funding.
Who were your investors and how much did you raise?
CoverWallet raised a $7.8M Series A round, led by Union Square Ventures. New investors Index Ventures and previous investors Highland Capital Partners, Two Sigma Ventures, and Founder Collective also participated.
Tell us about your product or service.
CoverWallet launched in 2016, is changing the way small businesses deal with insurance, by making it simple to understand, buy and manage, all online. We’ve done this by creating an innovative platform that allows business owners to find and buy insurance in minutes and manage it easily through an intuitive online experience.
What inspired you to start the company?
Inaki Berenguer and I came up with the idea for CoverWallet in 2015. We had met to discuss business opportunities, when Inaki received a call about the business he was with at the time. In order to close a deal, he needed their certificate of insurance and full policy, but the company’s agent was out of town and unreachable. We recognized that while there are tools available for agents, nothing was available for business owners to manage their insurance on their own. We personally witnessed the difficulties that small business owners across America deal with regularly when it comes to insurance, and decided to use our technical expertise to create an innovative solution.
How is it different?
The majority of businesses still use brick-and-mortar agents to purchase insurance, even though many start the search process online. CoverWallet’s solution not only makes this process simpler, as a business owner can complete the process of shopping digitally, but we’re also making it easy to manage your policy digitally. No more calling an agent for a certificate of insurance, or tracking contractor information in various spreadsheets. Our clean and easy platform can handle it for you.
What market you are targeting and how big is it?
We’re helping the 28 million small businesses in the U.S. Whether its buying new coverage as your business grows, checking if your current coverage is still right for you, or having an online platform to manage your policies, CoverWallet is helping small business owners and managers save time, money and frustration when it comes to insurance.
What’s your business model?
CoverWallet’s products and services are free to the customer. In fact, you can manage your policy through our platform, even if you haven’t purchased it through us. In the case that someone does purchase a policy through us, CoverWallet is paid by the insurance carrier
The company had previously raised in the spring. How does your role as a founder shift with each subsequent round?
As a founder, you are always concentrated on building the best possible solution for your customers and with additional outside funding, the pressure is on to ensure you are producing results for your investors. At the end of the day, your role as a leader in the organization is always the same – build a great team, set clear goals and ensure an environment in which the team can run hard and fast towards those goals.
What was the funding process like?
It’s time consuming but necessary. Its one of those areas of running a business that can be frustrating at times because you always feel the urgency to “get back to building the business,” rather than fundraising. But of course, its not only necessary, it’s incredibly valuable provided you are fortunate enough to put together the right set of investors. In our case, we feel so privileged to be working with our investor group. Union Square Ventures led this round and Index Ventures participated, two of arguably the best VCs in the world. In terms of how we approached the process, we had previously built a relationship with the investors, both personally and professionally, instead of just approaching them when we triggered the idea of raising additional money. So they already knew us as a team, and they had context about the opportunity, the progress we’d made and challenges ahead.
What are the biggest challenges that you faced while raising capital?
Again, I think we were really fortunate in our capital raising efforts. We were speaking with VCs that saw and understood the incredible opportunity in commercial insurance as clearly as we did. They believed in us and in the team we’ve put together and had a lot of conviction from the beginning.
What factors about your business led your investors to write the check?
Beyond seeing the opportunity, our investors believed we had the right team. When you’re looking at reimagining an industry as large as old as insurance, there’s debate out there as to which team model is likely to be more successful: a team of folks that come from the industry with deep domain expertise, or a team of outsiders with product and customer-centricity in their DNA. We are definitely the latter, with the added benefit of having built something so compelling that we we’ve been able to attract like-minded folks from within the industry.
What are the milestones you plan to achieve in the next six months?
CoverWallet’s continually improving its product and service capabilities. Commercial insurance is composed of a set of complex products, and the needs of each business are somewhat unique. We’re expanding our capabilities to be able to address a larger spectrum of scenarios entirely online, and make the end-user experience even simpler and more intuitive.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Every startup faces challenges, but it’s part of being an entrepreneur to find a way to overcome them. Frankly, the necessary steps to overcome challenges depend on the company. If you have some amount of money coming in already, maybe you simply have to hold off on expanding for a period of time. If you need to cut costs, ask yourself what expenditures you could get rid without impacting the end customer experience and value.
Where is your favorite bar in the city for an after work drink?
I usually work late during the week, so convenience is key. Lucky for me, Jimmy’s at the James Hotel here in Soho is right across the street. And if I haven’t eaten yet, I’ll head to the French/American bistro Lucky Strike which is right down the street.