Over the years, Foundation Capital has partnered with its fair share of successful fintech companies, each with its own innovative spin on an existing market: from Financial Engines providing better financial planning for its workplace customers, to Lending Club changing the way that people borrow money, to LendingHome creating a single massive online market for loans and property investment. We’re proud of what our companies have achieved, of the businesses that they’ve built.
Moreover, as our track record shows, I think we’ve gotten pretty good at identifying which startups have the “secret sauce” to become a great fintech company. Which is why we’re excited to have led the Series B for CoverWallet, an online insurance broker for small businesses which is upending the industry.
Small-to-medium business (SMB) insurance is a profitable, but highly fragmented $100 billion/year market. At the present, SMB insurance is sold through 40k+ brick-and-mortar insurance brokers, which employ 500k+ agents and move 99% of premiums. The typical SMB insurance application has 27 pages, and is completed while having “the talk” with the agent, which will include many upsell & cross-sell attempts. The typical SMB insurance quote takes 7-10 days. For SMB owners, this process is time consuming and painful.
Enter CoverWallet. By disintermediating the traditional broker model, with its many shortcomings―among them, this poor customer experience—and introducing a long-overdue on-demand model, founders Inaki Berenguer and Rashmi Melgiri have ushered an antiquated offline system into the 21st century. Inaki is a talented serial entrepreneur, with too many advanced degrees to list, as well as stints at McKinsey, Microsoft, amd NEC Labs. Rashmi is highly accomplished and analytical, with degrees from MIT and a decade of experience in consulting. The two of them have assembled a rock-star executive team in record time, in addition to outstanding product, engineering, marketing, and sales leads.
CoverWallet’s premise is simple: to become the destination where SMBs owners can buy insurance fully online. Using technology to shorten the application process, reduce customer acquisition costs, and manage the complexity of myriad policy offerings, the company has made it possible for customers to go from research to purchase in just a few minutes. For this industry, CoverWallet is a long overdue solution.
The company is also the latest example of a pattern you can find with our past investments: startups reimaginging businesses that had been conducted inefficiently and offline. OnDeck cut out the middlemen of the cookie-cutter, broker-centric world of small-business loans, and created a far better process, which fits in users’ pockets. With States Title’s statistical and tech-enabled approach to title insurance underwriting, what took property buyers and their agents days or weeks, can now be done in seconds.
CoverWallet, which has streamlined the experience of buying insurance for customers in a sector choked with inefficiencies, has all the hallmarks of these recent fintech successes. We feel fortunate to be their partner and look forward to great things from them. Congratulations and welcome to the Foundation Capital family!