Insurtech companies are emerging at the rate of over one a day and we are all self-publishing now. Twitter and Linkedin pump out real-time updates. Every day brings more opinions and an inbox full of insurtech news. So much choice, and too little time. How do we filter out the useful and important from the irrelevant and distracting?
Three startups and four investors active in insurtech. All very different, but they agreed on one thing. Raising money is hard. So what advice did they have?
12 Ways to Turbo Charge Your Startup
– Matthew Grant
Insurance is heavily regulated, capital intensive, low margin and highly competitive making it tough to break into as a start-up. But with an increasing number of organisations providing money and advice to newcomers in both insurtech and traditional broking/underwriting, the chances of success are improving. We heard about some of the great help insurtech startups can tap into at last Tuesday’s Instech London evening event “Startups you are not alone”.
Paul Ridge, Client Manager at SAS, has been inspired by the passion of the people he’s met at our events over the last couple of years. Paul believes data and analytics can change the world for better. During 2018 SAS will be building its customers of tomorrow, through incubating startups, finding the best ideas, and scaling these up and into production. We have been delighted to have SAS support for Instech London as a key sponsor in 2017 and Paul as co-host of our event on 27th February.
The UK government has launched multiple initiatives to support startups in fintech. Now it is looking at improving opportunities in insurance. A number of us participated in a workshop led by Gordon Baker of the Department for Business, Energy and Industrial Strategy (BEIS, formerly the DTI) last year. The discussion on the needs of the insurtech community contributed to the development of the UK government Industrial Strategy, released in November last year. Gordon joined us at the Steelyard to gave a snapshot of some of the many government initiatives supporting startups and established companies.
Growth Hubs is a countrywide network of communities of business experts, from universities, chambers of commerce and the private sector, offering free guidance to entrepreneurs in their scale-up journey.
The Department for International Trade (DIT) took a trade delegation of insurtechs to San Francisco last year. It provides assistance to companies to promote foreign trade and has more trips planned.
Be the business is a new initiative (with £13m from the government) providing collaboration and benchmarking tools and best practice studies for businesses that want to improve their productivity.
The British Business Bank offers government-backed loan and equity finance. Directors of startups can get personal loans of up to £25,000. Scale-ups can access initiatives such as the AngelCo Fund, with the bank making investments of £100,000 up to £1m alongside existing business angel syndicates. The bank’s Enterprise Capital Fund has already committed over £1bn in investments to 25 Venture Capital funds to help increase the supply of equity to UK early stage and high growth companies.
TechCityUK was set up by David Cameron in 2010 to help digital tech companies accelerate their growth. It announced last week that its Fintech Delivery Panel has launched a new subgroup (which includes Instech London partner Paolo Cuomo as a member), to focus specifically on insurance technology and innovation.
Innovate UK is launching the Next Generation Services Fund in 2018 to promote the use of Artificial Intelligence and data analytics in insurance, law and accounting. It will have £20m of grant funds to distribute.
And finally, FCA’s regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers. The FCA is currently asking for input on a proposed new Global sandbox initiative to support the UK’s insurtech and Fintech scale-ups to grow internationally.
Styliff is a great example of how collaboration and creative thinking by a startup solved a problem that could have destroyed the company, and in a way that also supported other early-stage companies. Co-founder Charlie Regis explained how, with only 5 months of funding left, Styliff was struggling to get traction with its hoped for insurance clients. Meanwhile, its development team didn’t have enough to do and were at risk of walking out the door. Charlie and his co-founders finessed the problem by offering their developers’ services to other young startups, but at a subsidised rate. This brought in the essential funds to extend its runway and kept the developers busy and engaged. Today the company is in discussion with major potential business partners and helping out other startups has become a key part of its strategy.
Insurtech Gateway is, according to partner Stephen Brittain, the world’s first independent incubator authorised to write insurance. It is a spin-off from Hambro Perks, which itself has the launch of 37 businesses to its credit since starting up 5 years ago. Insurtech Gateway takes equity in return for helping people with a good insurance idea find capacity, get access to operating capital and if needed, assistance in getting authorised. The team are hands-on and move fast, drawing on their experience, contacts and in many cases, own personal financial commitments. Stephen and co-partner Robert Lumley are supporters of Instech London and frequent visitors to our events. Although only launched in November last year, they already have a strong pipeline of early-stage companies. Bymiles, Floodflash and Inmybag are three of the current coherent and expected to go live in early 2018. Whether you’re after paper, funding, a team or, says Stephen, just a hug, give them a call.
Crowe Horwath is one of the largest global professional services companies, now expanding its actuarial and risk management services in London. Partner Daniel Bruce has seen encouraging signs in the last six months of a greater understanding at insurance company board level of the value of working with insurtech and startups. Crowe Horwath has its own data science team, creating new risk management analytics. Daniel chairs the Institute and Faculty of Actuaries working party which is developing a paper on “Risk management in a digital world”. One of the primary focus of the first phase will be recommendations for actuaries on how to work with and investing in Insurtech companies.
Founder Paul O’Conner and his team of 3 at Azimuth Insights are working for and on behalf of start-ups. Having previously worked at startup Guevera, Paul is familiar with the challenges of running and sustaining an early stage insurtech company. Typical projects are short and focussed, intended to provide high-value work, at prices designed for the low budgets of early-stage companies. Some of the best advice Paul has given has cost nothing, recommending to some founders that they are able and better to “do it yourself” rather than needing external help. Azimuth is also advising teams at insurance companies that see something they like in a startup but aren’t too sure if the tech makes sense. Their youngest client is 6 months, the oldest over 100 years. Paul encourages anyone wanting advice to reach out and have a chat.
Andy Thornley is head of corporate affairs for BIBA. Insurance broking represents 1% of UK GDP according to Andy and with over 2,000 FCA regulated insurance broker firms as members the association has a powerful voice when talking to the government to support the needs of brokers in areas such as regulation, tax and compliance.
In the last couple of years, BIBA has become aware of the need for its members to understand technology better and to improve collaboration between brokers and technology companies. A BIBA Innovation Working Group was set up in 2017, drawing together representatives from brokers, technology companies and includes myself representing Instech London. The working group has three goals. The first is to demystify innovation, defining terms such as AI, blockchain, machine learning and other emerging technology in ways the incumbent can understand. The second workstream is to help technology companies talking to brokers and the third to assist brokers in finding technology companies to work with. Strong progress is being made in all areas. Look out for more news in the next few months.
Videos for all of the above presentations are available here. The support for start-ups and innovation by such a wide range of organisations as the types represented here is one of the UK’s greatest assets. Formal collaboration and funding exist alongside a deeply connected and frequently altruistic network of individuals. We’ve been delighted at Instech London to support so many companies and individuals, both directly, and through chance meetings that have occurred at our events. Registration is now open for our next event “Getting Insurtech Funding in 2018” back at the Steelyard on 19th March. See you there?
We’re building out our plans for 2018’s monthly events. Let us know if you’d like to present. Sign up here to be kept updated on Instech London’s future events >> yes, sign me up!
Matthew Grant is a partner with Instech London and founder of Abernite. He’s helping insurers with problems, tech companies with solutions and investors with money to spend. Instech London has over 2,200 members representing over 700 companies and holds monthly evening events bringing insurers, start-ups and investors together.