New York has emerged as the capital of insurtech with most of the Fortune 500 insurance companies headquartered in and around the city and countless startups attacking various segments of the market. Poised to capitalized on this wave of innovation that’s attacking a traditional and often slow industry is Boost, a turnkey insurtech solution for entrepreneurs looking to build the future of insurance. Insurance boils down to calculated risk management and Boost minimizes risk, by accelerating time frames to market and providing transparency, for both entrepreneurs and incumbents while carving it’s place as the infrastructure provider.
Today we sit down with Boost Founder and CEO Alex Maffeo to discuss the genesis of the Boost idea from his venture capital experience, the future of the company and the industry, and the company’s seed round of funding.
Who were your investors and how much did you raise?
This was a $3 million seed round led by Norwest Venture Partners with participation from IA Capital Group, Greycroft Partners, and re/insurance industry leaders State National Companies (NASDAQ: SNC) and Nephila. It was our first round of funding, but we have been incubated at IA Capital, where I previously worked as a VC, for the past year.
Boost is a B2B insurtech development platform built to solve three critical issues faced by entrepreneurs in the insurance industry — (i) the glacial go-to-market pace for new products, (ii) the integration and data flow issues experienced between high-tech startups and low-tech insurance companies, and (iii) the cultural and often philosophical disconnect between incumbents and upstarts.
Basically, we accelerate the go-to-market timeline for insurtech startups by offering all the necessary products and services under one roof and by stripping out the bureaucracy of a large insurance company. This sounds simple, but it’s an incredibly complicated industry and it takes forever to even figure out the right people to speak with, let alone what steps you need to take to go live.
We are also building a modular, API-driven platform called the Boost Insurtech Platform™ that provides Rate/Quote/Bind, real-time policy endorsements, and statistical reporting services. Insurance companies typically have terrible technology systems, so Boost’s insurtech companies will never have to deal with a complicated and clunky integration process only to be left with slow, unreliable response times. The Boost Insurtech Platform™ will eliminate this problem for other startups.
What inspired you to start the company?
While I was at IA Capital, a VC firm that focuses on fintech and insurtech, we had an idea for a new insurance product in the student loan segment, but we had an insanely hard time finding an insurance carrier that was willing to let us test the product live in the market. This project was happening in parallel with our normal VC activity, and the insurtech entrepreneurs we were speaking with were all experiencing the same thing. The go-to-market process for an insurtech startup is just too long, and even the ones that are lucky enough to endure this process are left with terrible technology systems to integrate with.
We decided that there was a much bigger opportunity to build a full-service, technology-enabled insurance company that helps accelerate this process for entrepreneurs.
How is it different?
Boost is different in a lot of ways. First of all, it is fully B2B. Some partnerships between insurtech startups and insurance companies can be awkward because the startups are trying to build a consumer brand that essentially competes with its insurance company partner. Insurance companies are also fiercely protective about “owning the customer” and typically limit their startup partners in what they can do. That’s why if you use most of the online quote comparison sites, you typically need to click through to the carrier’s website or speak with one of their agents on the phone to complete the purchase. It’s a pretty clunky process.
Boost will not interfere with this. Our insurtech partners can own as much of the user experience as they want and we will simply be a silent partner powering them on the back end.
What market you are targeting and how big is it?
We are targeting the property and casualty (P&C) insurance industry. It’s a massive industry which generates about $600B (with a B) in premium every year.
What’s your business model?
We have a revenue sharing agreement with our insurtech partners. Boost’s share of the revenue scales down as our partners prove their concept and scale up.
We also provide product development services for companies that are looking to launch their own insurance products or expand into new markets.
How has your previous experience in venture influenced the trajectory of this business?
I think the VC experience is directly transferable. I want Boost to approach insurtech partnership opportunities like a venture capital fund would – except instead of providing equity capital, we will be providing insurance capital. The key here is to support things that are new and different which is something that is often difficult within a traditional, risk averse insurance company.
What was the funding process like?
Let’s just say if I ever find myself back in the VC world, I will be far more empathetic. Our investors are great, but the process is not fun. The level of stress and anxiety on the entrepreneur side of the table is infinitely higher than on the VC side.
What are the biggest challenges that you faced while raising capital?
I’m a pretty impatient person, so the sheer amount of time it took was the hardest part. That and lawyers.
What factors about your business led your investors to write the check?
From Boost’s VC investor perspective, I think they see insurance as an enormous but archaic industry that hasn’t been innovated on the product or technology side in decades. It’s a big target with a lot of startups attacking individual segments. Boost is trying to provide the picks and shovels for these startups which essentially gives our investors exposure to the whole market. It might not be as sexy as a consumer brand, but we think it will add a tremendous amount of value.
From Boost’s re/insurance investor perspective, they recognize and embrace the insurtech movement and want to see a single platform available to support it. Boost serves as an aggregator of insurtech programs that are going to initially be pretty small relative to the core operations of an established insurance company, so we serve them by not only vetting and curating these startups but also aggregating the programs on their behalf.
What are the milestones you plan to achieve in the next six months?
We are going to staff up over the next few months and get ready to roll out an MVP of the Boost Insurtech Platform. We’re looking for talented engineers who like to unwind massive problems. We are also looking for forward-thinking insurance professionals who want to change the industry. We hope to go live with our first insurtech partners in early 2018.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
If you’re about to hit the road to fundraise, mentally prepare yourself for a lot of no’s. Let the naysayers be your motivation. If people think what you’re doing is too hard to pull off, you’re probably on to something.
Where do you see the company going now over the near term?
We’re probably going to bury ourselves in a deep, dark hole for the next few months to build. We want to be live with a few insurtech partners in early 2018 which will require an aggressive roadmap.
Where is your favorite fall destination in the city?
I usually just like to watch NFL games at a bar with some friends but, as a Jets fan, I may need to rethink that this year.