The Pace for InsurTech is Thriving: Opportunities Exist to Maximize Success for Startup Acceleration in Hartford, CT, Part 2 of 3

Carmen Cotei is a Professor of Finance and Chair of the Economics, Finance, and Insurance Department at the University of Hartford’s Barney School of Business. She teaches Mergers and Acquisitions, Financial Markets and Institutions as well as Corporate Finance courses.

Ken Goldstein is a former global Cyber Security Product Manager at legacy Chubb Group of Insurance Companies. He is currently a Clinical Instructor at the University of Hartfords Barney School of Business and teaches innovative InsurTech and Cybersecurity curriculum. Professor Goldstein and Dr. Cotei would like to thank Dawn LeBlanc, Managing Director of Hartford InsurTech Hub, and Leland Holcomb, former Head of Scouting and Investor Relations at Hartford InsurTech Hub, for their helpful insights and support in connection with this article.

This post is Part 2 of 3. Part 1 is available here, and Part 3 will be posted on the blog tomorrow.

FINANCING OF INSURTECH STARTUPS

From a general financing perspective, technology startups have the potential to benefit greatly from external funding in order to maximize their overall success.[1] In fact, notwithstanding Covid-19, the global market provided $7.1 billion in backing for startups in 2020 alone.[2] This included 377 deals, which is the highest number in any calendar year.[3] Moreover, a substantial portion of year-end 2020 funding was related to property & casualty business in particular.[4] At the same time, the market saw an overall increase in mid-stage (Series B and C) funding opportunities and certain companies were consciously rewarded with $100 million or more in financing.[5] Not surprisingly, the InsurTech industry is poised to grow rapidly over the coming years.[6]

ACCELERATOR PROGRAMS

As a part of a concentrated growth strategy, InsurTech startups often look to collaborate with accelerator programs to positively impact their potential for success, including the likelihood of future funding and partnership.[7] Accelerators are unique in that they focus upon early-stage companies and include all of the following criteria:

• Fixed term
• Cohort based
• Mentorship driven
• Culminate in graduation[8]

To expand further upon the process, acceleration ordinarily includes applying for, and getting accepted to, an accelerator program, obtaining funding from the program (e.g., seed in exchange for equity), maintaining focus over a defined timeframe and in a designated location, enhanced learning opportunities via seminars, workshops, and mentorship, the ability to network with peers, industry support providers and potential investors, and a graduation day opportunity (e.g., a demo day where startups present and pitch).[9]

CONNECTICUT LANDSCAPE

With accelerator programs in mind, Connecticut provides an ideal place to support next-generation insurance innovation.[10] For starters, Connecticut has close to 1,500 domestic and non-domestic insurance carriers doing business in the state for potential collaboration purposes.[11] In addition, these insurers write $39.1 billion in direct written premiums for the CT market and $193 billion in premiums written in all markets.[12] Furthermore, from an industry sector perspective, Connecticut ranks #1 in the U.S. in direct written health insurance premiums, #6 in direct written life insurance premiums, and #6 in direct written property & casualty premiums.[13]

Beyond the number of insurers and their premium footprint, Connecticut also affords a significant pipeline of talent for companies to consider.[14] In fact, Connecticut is #1 in the U.S. in insurance employment and has top-performing business, engineering, and other Colleges and Universities supporting its insurance ecosystem. [15] For example, over the past several years, UConn School of Business, in collaboration with UHarts Barney School of Business, successfully co-taught a seminal InsurTech Venturing course to high-performing undergraduate and graduate students.[16] Post-course, a cohort of students were competitively selected to intern for InsurTech startups as a part of Hartford-based accelerator programs. [17] Aside from the support associated with CT-based talent and education, the states ecosystem also affords venture capital investment opportunities and mentors to support the acceleration process generally.[18]

ANALYSIS OF ACCELERATORS IN HARTFORD, CT

With regard to Hartford, CT in particular, there are a number of accelerator programs historically driving innovation on behalf of the state.[19] These programs include STANLEY + Techstars, Upward Labs, the reSET Impact Accelerator, Nassau Re/Imagine, Hartfords Digital Health Accelerator, and more.[20] Below is a visual overview of the accelerators by name and purpose.

HARTFORD INSURTECH HUB

As a part of this article, we analyzed one seminal, legacy leader in detail regarding technologies impact upon insurance. Specifically, the Hartford InsurTech Hub (the Hub) Powered by Startup Bootcamp, which was co-funded by Cigna, Travelers, and The Hartford, had historical success in accelerating three cohorts between 2018-2020. They offered a market leading program for InsurTech companies, and while their program was adversely impacted by Covid-19, including the ability to travel globally for scouting purposes, they built a robust, contemporary model worth exploring. This model was based upon active collaboration between local insurers, City of Hartford Representatives, and Community Stakeholders looking to innovatively develop Connecticuts InsurTech ecosystem. [21] In fact, the Hubs international reach for diverse startups was purposeful and powerful.[22] In fact, they supported breakout growth by attracting next-generation talent, making investor connections, and advancing originality in diverse segments of insurance, including health, life and property & casualty business.[23]

Based upon an interview with the Hubs Managing Director, Dawn LeBlanc, and their former Head of Scouting & Investor Relations, Leland Holcomb, there were several steps that the Hub took to evaluate startup talent before accepting companies to their accelerator program.[24] After a competitive application process opened and international startups within the Hubs network were notified, the Hub engaged in significant outreach, including a concentrated social media campaign.[25] Thereafter, in-bound and outbound referrals took place and fast track pitch events were scheduled globally to focus upon startups of interest.[26] To create additional efficiency in the process, the Hub considered consolidated applications as a part of live pitch days.[27] They also regularly engaged in follow up discussions (e.g., calls, Skype) for non-fast track pitch companies to support designated time with their legacy team.[28] After the application process closed, the Hub selected one hundred companies (from a much larger pool), narrowed things down to fifty, and obtained a contractual commitment from twenty to attend selection day events (the contractual commitment reinforced a startups agreement to join the accelerator program if selected by the Hub).[29] Ultimately, after the Hubs selection days concluded (a natural speed dating of sorts), eleven companies were formally invited into their 2020 program for acceleration purposes.[30]

This post is Part 2 of 3. Part 1 is available here, and Part 3 will be available tomorrow.

[1] Mike Butcher, InsureTech startup Counterpart raises $10M in funding round led by Valor Equity Partners, TECHCRUNCH (March 23, 2021), Insuretech startup Counterpart raises $10M in funding round led by Valor Equity Partners | TechCrunch; Shreya Ganguly, Insurtech startup Symbo raises $9.4M in round led by CEFIF, Think Investments, YOURSTORY (March 4, 2021), [Funding alert] Insurtech startup Symbo raises $9.4M in round led by CEFIF, Think Investments (yourstory.com); Rebecca Ayers, Insurtech Rhino raises $95 million in funding round, FINLEDGER (January 26, 2021), Insurtech Rhino raises $95 million in funding round – FinLedger.

[2] BUSINESS INSURANCE, INSURTECH INVESTMENTS REACH RECORD $7.1B in 2020: WILLIS, Insurtech investments reach record $7.1B in 2020: Willis | Business Insurance.

[3] Id.

[4] Id.

[5] BUSINESS INSIDER, supra note 5 (noting that late-stage mega-rounds drove the momentum, with Bright Health securing $500m in a single quarter and Hippo scoring $500m over consecutive quarters).

[6] BUSINESS WIRE, GLOBAL INSURTECH MARKET WILL GROW BY ALMOST USD 15.63 BILLION DURING 2019-2023, Global InsurTech Market Will Grow by Almost USD 15.63 Billion During 2019-2023 | Technavio | Business Wire.

[7] Alejandro Cremades, How Startup Accelerators Work, FORBES (January 10, 2019), https://www.forbes.com/sites/alejandrocremades/2019/01/10/how-startup-accelerators-work/#2130b0cc44cd; Danni Santana, How accelerators link insurers and insurtechs to fast-track innovation, DIGITAL INSURANCE (May 3, 2018), How insurtech accelerators link insurers and startups to fast-track innovation | Digital Insurance (dig-in.com).

[8] FORBES, supra note 26.

[9] Id.

[10] Claire Hall, Hartford Has Become One of Top 5 Cities for Techies, UCONN SCHOOL OF BUSINESS (January 25, 2021), business.uconn.edu.

[11] PWC AND CT IFS, 2020 CT INSURANCE MARKET BRIEF (October 2020), CH15-0006 2014 CT Insurance (pwc.com).

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] HARTFORD BUSINESS JOURNAL, UHART, UCONN SET TO LAUNCH INSURTECH CURRICULUM (August 20, 2018), UHart, UConn set to launch insurtech curriculum | Hartford Business Journal.

[17] InsurTech Initiative | Connecticut Center for Entrepreneurship and Innovation (uconn.edu).

[18] PWC AND CT IFS, supra note 30.

[19] See Incubators & Accelerators Innovation Destination Hartford (innovationhartford.com) (provides a broad listing of local incubators and accelerators).

[20] Id.

[21] See https://hartfordinsurtechhub.com/.

[22] Id.

[23] Id.

[24] LeBlanc, Dawn and Holcomb, Leland. Hartford InsurTech Hub 2020 interview.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.