Ben focuses on Seed to Series B investments in insurtech and climate tech. His current portfolio companies include Spectrum Labs, FloodFlash, Amplify Life, Insify, HDVI and Forge Global. Prior to MRV, Ben spent time as an investor at Samsung NEXT Ventures, Alpha Venture Partners, and JetBlue Ventures, as well as a founder of a mobile software startup. We caught up with him to tap his expertise and find out his predictions for the coming months.
Tell us about your journey into insurance/Insurtech and Munich Re Ventures. You have some entrepreneurial experience – and also Board Observer positions. How has that experience brought you to this point in your career?
I had a very circuitous journey to MRV. My very first job was removing trees from customers’ yards during the summer of 2007 in Phoenix, Arizona. Everything seems easy after tree removal in 110 degree heat! After some stints in finance, I founded a company with a friend and immediately fell in love with tech. Although that startup ultimately failed, I decided to remain in tech, but this time on the investor side of the table.
I was tapped by JetBlue Airways to help stand up their corporate venture capital arm. After spending time at another CVC, a growth stage fund, and as a student at Columbia Business School, I found my way to MRV in 2018, where I currently lead investments in Insurtech and ClimateTech. It’s been a journey.
The past five years have been somewhat of a roller coaster ride for the Insurtech industry. In your opinion, is there greater resilience now as a result?
While the Insurtech industry has had its challenges of late, I am still bullish in the long term. While it is harder to raise capital in the space today as compared to 2018-2021, current Insurtech founders have the benefit of having seen companies in the sector go through full lifecycles, from company creation to IPO. There have been a lot of important lessons along the way. While some of those results have been less than desirable, that founders now have more experience and knowledge ultimately leads to more resilience in the sector overall.
Speaking of resilience, and the impending issues of climate change and its impact on insurers, has adequate preparedness been achieved? How can ClimateTech help?
As an investor, I strongly believe that new technologies have an important role to play in making an impact on climate change. Our firm is putting that thesis to work, as ClimateTech is a key investment sector for us. We’ve made investments in companies that are actively trying to solve climate change problems, such as Twelve (direct air carbon capture) and Zanskar (geothermal energy). We also look at innovations in insurance as it relates to natural catastrophe risk, like our investment in FloodFlash (parametric flood insurer). I believe startups like these are building massive, impactful solutions that will be good for both insurers and society at large.
What strategies can Insurtech companies use to increase their resilience?
I encourage companies to have someone around the table – e.g. investor or advisor – with strong insurance chops. Founders don’t want to get pushed in a direction that may seem good in the short term, but is not sustainable or effective longer term. The
insurance industry is a very established, close-knit industry. Many insurance companies are over 100 years old! While it’s incredibly important for founders to think differently vs. incumbents, it’s equally important to understand the nuances that come with this legacy industry. Additionally, now that Insurtech has been around for some time, having someone onboard who has worked with lots of similar companies can be incredibly beneficial to a startup.
Investment is the big question on everyone’s lips. Is it getting better, or are we looking at more issues over the next few years?
Right now is certainly a challenging time for Insurtech companies, particularly given the lack of robust liquidity events in the sector. This inevitably affects growth stage companies more than seed & series A startups, but it can be felt across the entire sector. However, in my opinion, this is temporary. Investors and founders now know what metrics to track at specific stages, what lines of insurance are attractive, and how best to set companies up for success.
Insurtech startups will ultimately be successful in one of the largest sectors in the world. Will things get better in 18, 24, or 36 months? It’s hard to know. But as an investor, I wouldn’t want to miss out on a stellar company just because the first few public Insurtechs had disappointing debuts.
What can Insurtech startups do to attract investment in this hard market?
While it depends on stage, one thing all startups can do is have a laser focus on controlling burn rates. Capital preservation is key right now, and potential investors want to make sure founders are spending cash in a sophisticated way and/or making hard decisions to keep the company going.
In addition to burn, startups should be realistic about valuation expectations in this environment. I’ve seen plenty of bridge rounds in the last 12 months, and many of these deals were getting done at substantially lower multiples vs. their previous transaction. Ultimately, in challenging markets like this, the best founders are accepting that they have to do more with less. Being able to inspire their teams to accomplish this task and then successfully executing on their plans should attract new investors.
What’s the most influential trend in the Insurtech industry that’s driving growth?
The majority of capital deployed in Insurtech has been in what we at MRV call the “Challenger” side of the industry. These companies are typically MGAs or carriers that are competing with insurance incumbents. In my opinion, this is still the single largest trend driving the Insurtech industry forward.
However, we have seen an increase in attractive companies operating in different parts along the insurance value chain, such as reinsurance marketplaces, broker tools, embedded solutions, and infrastructure software. We typically refer to these as “Enablers” and think there will be large companies built on this side of Insurtech as well. I believe we will continue to see a
trend of incumbents choosing to work with these companies, as opposed to trying to build everything in-house.
Where would you like to see the Insurtech industry in five years, and why?
Today there are two facts to note about the Insurtech industry. First, there are very large Insurtech companies operating at a high level – Next, Coalition, Pie, At-Bay to name a few. All of these companies operate in commercial lines of insurance with very different distribution strategies as compared with Insurtech 1.0 companies like Lemonade, Root, and Hippo. These private companies also have the benefit of learning from that first wave of Insurtech IPOs. Second, the IPO window is largely closed today, as demonstrated by the significant drop in volume of public offerings over the last 12 months.
Once this reopens, hopefully in 12-24 months, I suspect we will see successful public listings for some companies. This should create a tailwind for earlier stage Insurtech startups, especially those in commercial insurance, to be able to raise favorable growth equity rounds again. Also, it could generate increased M&A activity from incumbent carriers. Thus, in five years’ time, I expect to see many of today’s best seed and series A Insurtechs in very good positions.
What inspires you in the Insurtech space today, and why?
A very inspiring trend is true product innovation in insurance. My colleagues have led deals for companies that insure IVF treatments, social media influencers, and artificial intelligence. I love talking about these unique risk transfer solutions being applied to real problems in our world today. I expect we will continue to see many more like them.
Interview by Joanna England
