We are excited to bring Transform 2022 back in-person July 19 and virtually July 20 - 28. Join AI and data leaders for insightful talks and exciting networking opportunities. Register today!
Extended warranties are big business. How big? A report from Research and Markets estimates the segment will reach a whopping $50.2 billion by 2026. There’s unsurprisingly merchant interest in the opportunity, but most sellers lack the know-how and bandwidth required to pursue it.
That’s where Extend comes in. The San Francisco-based company, which offers what it describes as a full stack extended warranty program, today announced that it’s raised $16.4 million in funding led by GreatPoint Ventures with participation from Pritzker Group Venture Capital, Lightbank, and Shah Capital Partners, along with ex-CEO of Equifax Rick Smith, Katerra CEO Michael Marks, DraftKings CEO Jason Robins, and Village Global cofounder Erik Torenberg.
Extend founder and CEO Woodrow Levin said the capital infusion will support Extend’s product development efforts.
Extend also announced that it’s “purchased several agreements and assets related to administration of warranty programs in the U.S.” from Affinity Insurance Services, an affiliate of Aon. As part of the deal, former Aon Warranty Solutions senior vice president Pedro Rodriguez will join Extend’s C-Suite as senior vice president of insurance and strategy.
“Before Extend, extended warranties were only accessible to the top 1% of merchants and often had a negative reputation with consumers, which left a huge portion of the market unable or unwilling to offer protection plans,” said Levin, who founded Extend following successful exits from startups including DocuSign acquisition target Estate Assist. “Extend’s rapid growth is a testament to the increasing demand for an extended warranty solution that all merchants can use and customers can trust.”
Extend, which is a fully licensed contract administrator, automatically identifies a merchant’s warrantable products and pairs them with plans from an insurer network. It handles claims by chat, phone, or online form, most of which it says are resolved in minutes. Often, Extend directs customers back to the merchant to procure a replacement item, but if the item’s protection plan calls for repair, the company’s agents schedule an appointment at a service center (or the buyer’s home).
Extend’s free API and prebuilt ecommerce platform integrations use machine learning to dynamically test prices, copy, content, and placement. These constant optimizations of warranty offer purchases results in attach rates double the industry average (11%) for legacy online protection plans, Extend says.
Extend levies a service fee each time a protection plan is sold, minus a revenue share for sold-through protection plans. Merchants collect the full price of the warranty at the time of sale, which includes the premium, the aforementioned fee, and a merchant margin.
Extend says it’s partnered with merchants across a range of segments including consumer electronics, furniture, jewelry, musical instruments, automotive parts, appliances, automotive, and sports and fitness. It claims its customer base collectively has annual gross sales of over $11.5 billion, and that it reaches brands like SoClean, August Locks, 1More, Club Cadet, Wynd, Zebit, Coinmine, Polycade, RealTruck, DS18, Outcast Garage, New Air, and others.
“We’ve been amazed with how fast Extend has grown. It’s a testament to the strength of the company’s leadership and technology,” said GreatPoint managing partner Andrew Perlman. “This is an industry that has been yearning for innovation and protection plans that customers can trust. It’s about time that every manufacturer can now provide the Apple Care type experience that they know customers want.”
VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Learn more about membership.