Embroker, a digital insurance company based in San Francisco, today announced that it’s raised $28 million in a series B funding round led by Tola Capital, with participation from existing investors Canaan Partners, Bee Partners, Manulife Capital Ventures, Nyca Partners, and XL Innovate. It follows on the heels of a $12.2 million series A round in May 2016, and brings the startup’s total raised to $42 million.
The capital infusion will drive the expansion of Embroker’s platform well into the coming months, said CEO and founder Matt Miller, and it comes after a blockbuster year during which the company provided more than $1 billion in liability coverage to technology companies. (Embroker estimates that it currently works with more than 5% of all active VC-backed tech companies in the U.S., a share it’s projecting will double by year-end.) In 2018, it tripled revenue across its customer base of over 2,500 companies, moreover, and says it’s on track to more than double revenue in 2019.
“Business insurance has been painful and inefficient for far too long. We are incredibly excited to offer something that is unequivocally better, faster, and cheaper,” Miller said. “We’re proud of how much time and money our customers have saved and thrilled to have the support and capital needed to further accelerate our growth.”
Embroker doesn’t retain any risk itself, but instead matches organizations of between 10 to 1,000 employees with policies from over 50 commercial carriers including Travelers and The Hartford. Some policies — like the directors & officers (D&O) and employment practices and liability (EPL) insurance in its recently launched Embroker Startup Program — are custom-built for verticals like technology, and come with “data-driven” guidance provided by a team of insurance advisors, plus real-time claims tracking and instant certificates of insurance. Companies can track and manage assets and vendor certificates online and customize requirements by project, and receive notifications for noncompliant and expired policies or add variables like property location information.
“I have had the privilege of working with amazing teams to build truly transformative businesses repeatedly over the past 30 years and Embroker clearly has the same opportunity,” said newly minted board member Bill Veghte, a veteran of Microsoft, Hewlett-Packard, and Survey Monkey. “While the $800 billion commercial insurance industry has remained largely static over the past 30 years, Embroker has the right team, product, and strategy to drive significant and lasting change and this made it an incredibly compelling company to be involved with.”
Embroker claims that by automating and digitizing underwriting, it’s able to provide more tailored coverage within 10 minutes of receiving an application. And it credits its predictive analytics systems, which analyze and benchmark coverage uploaded by customers, with generating an average of 20% cost savings per customer.
“We’ve been watching the insurance space closely for enterprise companies using data and technology to transform various aspects of the industry,” said Tola Capital managing director Sheila Gulati. “Embroker stood out as a clear category leader, who is overhauling and modernizing the whole business insurance value chain.”
The insurance tech business is booming, it would appear. Last year, online platform Next Insurance, which targets small business owners with a focus on specific niches (e.g., “landscaper insurance” and “personal trainer insurance”), raised $83 million. And in March, Washington, D.C.-based worker’s compensation insurer Pie Insurance brought in $45 million, a month after CoverHound secured $58 million.
The global insurance market is expected to reach $1.11 billion by 2023, fueled by growth in verticals like health, property, casualty, and life insurance. According to a recent analysis of CB Insights data by XL Innovate, over $1 billion has been invested in commercial insurance startups since 2015, and FinTech Global estimates that deals totaled $2.5 billion in the first three quarters of 2018 — an 89.8% increase year-over-year.