Are you about to invest in an Insurtech startup? Working with one? Or founding one? How do you know if you're likely to be successful (= make money?)
We are still in the hype stage of Insurtech startups. There have been no major failures.
But statistically most startups will fail.
So what should we look for to have confidence that the early excitement we feel is supported by evidence that we are in for a long and fruitful relationship?
It was demo day for the startupbootcamp Insurtech London cohort of 2017 today. A great chance to see how 10 new companies have honed their businesses and crafted their stories over an intense four months.
They certainly had no shortage of advice from investors, potential clients, previous entrepreneurs, mentors and any of the rest of us that cared to express an opinion.
Congratulations to the teams from Adapt Ready, Aerobotics, Aimo, Emerge, Insure a Thing, Nuvalaw, PORT, Sharenjoy, Tikkr and Trackactive for distilling all this into 10 punchy presentations of less than 10 minutes.
Inspired by what I heard today, and drawing on a couple of decades of experience, here are 10 ways to tell if you and your startup will live happily ever after.
1. Case studies
We all love stories. Having examples of real clients using the product to solve real problems makes it so much easier to get to grips with what is being offered. Is the use case clear enough that you can tell someone about your favourite company in a way that they can then repeat your story to someone else?
2. Show me the money
Will this help the end client save money? Better still, will it help them make money? And if so, how can this be measured? The more vague the definition of where the payback comes from, the harder it is going to be to sell the product.
3. Who cares?
It was great to see hard numbers today about the number of insurance companies that were interested in many of the propositions. Proof of concepts are good, pilot studies better but ultimately it’s about repeatable paying client companies. Are you clear about the difference?
4. User statistics
How many people are actively using the product and how often? Have you found a company with users that engage with the product every day? If so hang onto them and be more forgiving of other shortcomings.
5. Name the names
Disclosing the names of partners and clients gives confidence in the reality of points 1 - 4 above. Any insurer that is willing to have their name associated with a startup is likely to feel reasonably confident about what they are seeing. Beware though, some insurers are taking a portfolio approach with whom they work with, and spreading their love widely. Look for more than a couple of names.
6. Call to action
There were over 700 people in the audience at the O2 today. Those presenters that had a clear request for the audience, whether asking for funding or looking for potential clients showed that they were able to grab a big opportunity when it presented itself.
7. A shift in external conditions
Is the external environment changing? Regulation and compliance may be a constraint for incumbents but changes such as GDPR (General Data Protection Regulation) represent massive opportunities for new entrants.
8. Think global
It is noticeable how many of the startupbootcamp cohort this year have come to London to accelerate their business. For real growth, selling into the UK, or even Europe is not going to be enough. Most insurers are global. Big name investors want to see the potential from the scale that comes from being able to sell into the US or Asia. Or both.
9. The network effect & adjacent markets
Any business that can sell to it’s clients’ clients builds a powerful network. Having a proposition that can also expand beyond insurance into adjacent areas such as agtech, regtech, medtech and all their cousins creates opportunities for diversification and expansion. But not so soon as to lose the focus as getting it right in the core market.
10. “We have an unfair advantage over our competition”
I loved this comment today. Enough said.
Matthew Grant is the founder of Abernite and a partner with InsTech London. He is working with, and an investor in, some of the best fast-growing technology companies serving the global insurance market. Matthew has spent over 25 years helping insurers shift from gut instinct underwriting to a more data driven approach.