According to a recent McKinsey study published last year, the small commercial market for insurance has good potential for growth but it’s fragmented and competitive. The largest player in the space only commands 6% of total premiums with ~50% of premiums split between 11 carriers. Carries are scrambling to differentiate themselves and secure more market share in a growing market where 40% of sole operators don’t even have insurance yet – a market that’s ripe for the taking. Enter, CoverWallet, the technology-backed platform that assists smalls businesses secure, manage, and maintain their insurance, leverage the internet. Gone are the days of opacity in insurance thanks the thriving platform which is partnered with some of the most respected names in the insurance world including Travelers, Progressive, and Liberty Mutual
Today we chat with CEO and cofounder Inaki Berenguer about the company’s latest raise, its future plans, and the state of the insurtech market in NYC.
Who were your investors and how much did you raise? Was it seed, Series A, B, etc?
We closed a $18.5 million Series B funding round led by Foundation Capital with participation from existing investors Union Square Ventures, Index Ventures, CV Starr, and Two Sigma Ventures.
Tell us about your product or service.
CoverWallet utilizes state-of-the art technology to help small businesses understand their unique insurance needs, buy customized coverage, get significant savings and conveniently manage their insurance, in a matter of minutes, all through our online platform.
What inspired you to start the company?
As entrepreneurs, my co-founder, Rashmi Melgiri, and I experienced firsthand how opaque, confusing and time consuming dealing with commercial insurance was, and teamed up to rethink how the industry treats small business.
How is it different?
CoverWallet is a new and easier way for small businesses to understand, buy and manage insurance that fit their needs, delivered through a seamless online experience. The status quo is the offline world, an experience –with brick and mortar insurance agents– that is time consuming, analog and frustrating.
What market you are targeting and how big is it?
The $100 Billion small business insurance market. More than 28 million small businesses in the US.
What’s your business model?
CoverWallet aims to bring small business insurance customers the same consumer-friendly online technologies many of them already use to manage accounting, sales, payroll, banking and human resources. You can manage your policy through our platform, even if you haven’t purchased it through us. Additionally CoverWallet’s features include automatic risk analysis, document management, benchmarking and data analytics, intelligent data driven risk and insurance assessments, coverage recommendations, peer risk comparisons and claims support. CoverWallet’s products and services are free to the customer. We are paid by the insurance carrier.
How has the business changed since we spoke to you last fall?
The business is growing fast and steady in the right direction, attracting top talent, and increasing revenues exponentially, with a larger and broader customer base. All this supported by a robust tech platform that keeps improving to make buying and managing commercial insurance as seamless as possible.
What was the funding process like?
In late July, we engaged in conversations with a selected group of investors that could add value and had been following our progress. They already knew about CoverWallet and the industry so it was a quick process.
What are the biggest challenges that you faced while raising capital?
It was combined with the daily challenges and workload of building a fast growing company.
What factors about your business led your investors to write the check?
Leadership, “make it happen” culture, a well balanced team of A-players, tech-product DNA, current position as a market leader (despite being in the early days of online commercial insurance), timing, and size of the industry.
What are the milestones you plan to achieve in the next six months?
Continue building our core technology, expand partnerships, and scale operations, in order to meet growing demand and to solidify our position as a market leader.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Control your burn and laser focus on real progress towards your next milestone. Don’t chase vanity metrics.
Where do you see the company going now over the near term?
The online commercial insurance market is developing into a multi-billion dollar industry. As leaders, we are contributing to define it, and need to leverage this unique opportunity to ride that growth within the market.
When you first started the company, insurtech was in its infancy in general and in NYC. Now it seems as though NYC has become the epicenter for insurtech. Any thoughts on why this happened?
To reinvent this industry, you need startup teams with tech, design, digital marketing DNA. You also need to be within a developed industry ecosystem, to recruit proper know-how, and establish relevant partnerships. New York brings that unique combination, and is the home of most of the largest insurance companies in the world: Chubb, AIG, Travelers, Metlife or Marsh.
Where is your favorite bar in the city for an after work drink?
Ha ha! After 14 hour workdays on a constant basis, I try to go home, unless we have a networking event. The beauty of being an entrepreneur is that you pick the industry you want to be in, so when you do network, you’re surrounded by people that enjoy talking about their niche.