Where is the early money for Insurtechs in Australia? Where is the adventurous capacity? What areas of Insurtech are seeing rapid growth? How do you convince VCs to invest in a pre-revenue Insurtech? How do we go international without a regulatory footprint? Should an Insurtech take money from a carrier?
These were some of the curly questions covered in a panel I chaired during the ANZIIF Insurtech ’20 conference last week.
On the panel were three industry professionals with a wide range of experience and expertise. Representing the Insurtechs was Jonathan Buck from Huddle, on the investment side was Greg Mullins from Envest and Simon O’Dell represented the incubators and his new venture at Insurtech Gateway Australia.
Investing and growing an Insurtech shares many of the same blockers found when investing and growing any startup. Smart money, investing in teams and founders, getting traction and proving your product cheaply before seeking investment were all covered.
However, things got interesting when the discussion focussed on the specific problems facing Australian Insurtechs.
The ANZIIF Insurtech Conference was held in in Sydney.
Early money. Smart money.
Greg Mullins from Envest o!ered some practical insights into the di!iculties of investing early in Insurtechs. With a portfolio of minority investments across brokers, underwriting agencies and insurance related investments, Greg is in the trenches and helping grow the Australian ecosystem.
Greg discussed the need for a solid team with the tenacity to hang in through the hard times. Through their investments, the Envest team hopes to shepherd Insurtechs away from the common pitfalls for early insurance businesses.
When evaluating Insurtech deals at such an early stage, Simon highlighted that the Insurtech Gateway team are happy to take on the team and product risk. Later stage investment is more about market risk. Simon elaborated that Insurtech Gateway likes to back founders who have a unique insight into the problem being solved and an ability to build a product ten times better than what’s in the market.
Highlighting the value in real terms
Jonathan from Huddle outlined the benefits of having industry experts as investors and the importance of the alignment of interests. Jonathan highlighted the value in real terms when he mentioned a recent deal with a multinational where his earliest investor was able to open the door and kick off the partnership. This is the smart money.
On incubation and Insurtech Gateway
With the launch of Insurtech Gateway Australia, Simon O’Dell hopes to grow the ecosystem of Insurtechs in Australia. First-time founders become second-time founders with a wealth of knowledge behind them and feed the ecosystem.
Simon noted that some of the best Insurtech founders come from outside the industry and he discussed the need for structured incubation to ensure ideas get to market and realise their potential, without falling foul of the traditional barriers that stifle innovation.
Accessing adventurous capacity
Not all Insurtechs create and sell insurance products but for those that do, selling an off-the-shelf product will not lead to disruptive traction.
For Insurtechs with a global mindset, accessing capacity and a regulatory footprint to trade in multiple jurisdictions is even more difficult.
The opportunities
It’s clear from the panellist experience and reinforced by the questions from the audience that there’s a growing need for early Insurtech investment and adventurous capacity in Australia.
There’s a baseline of Insurtech founders we’re seeing through Insurtech Australia and more founders are being attracted to the industry. At the moment, Envest are doing most of the heavy lifting in this space and there is a significant opportunity for smart money to combine early stage investment with access to a regulatory footprint and adventurous capacity.
With the launch of Insurtech Gateway Australia there are now more avenues for Australian Insurtechs.
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