The Corporate Venture Capital-as-a-Service Influencer

Topic: #Insurtech in China | Swiss Re Institute

The Chinese insurance market has grown rapidly over the past decade and now ranks as the third largest globally. The adoption of Insurtech along the whole insurance value chain is poised to further grow and transform the industry. This is exemplified by the rising investment in insurance technology by Chinese investors. In 2016, there were 173 such investments in tech start-ups, up 44% from 2015.¹ At the same time, ZhongAn Insurance, the first internet-only insurer in China, had a successful IPO in Hong Kong in September 2017. It raised USD 1.5 billion, making it the world’s largest Insurtech insurance company.²

Insurtech refers to the application of digital technology in insurance business, including making use of Big Data, artificial intelligence, the Internet of things, blockchain, telematics, unmanned aerial vehicles, and cloud computing. There has been a surge of new players, services and products in this field, which can sometimes be disruptive to the traditional insurance model. For instance, one of ZhongAn's main initial founders was Ant Financial, an affiliate of Alibaba, which operates the world's largest digital payment platform. Its strength in technology and client resources supported ZhongAn's successful product development of an e-commerce shipping return insurance.

via institute.swissre.com

#Reinsurtech = the next wave of #Insurtech #Startups

via www.oxbowpartners.co.uk

#Insurtech with @fundshop1 - panel discussion on marketing #robo-advisors to general public

I was supposed to talk at this panel in #London but had to cancel. Instead, will be publishing a personal take-away and views on #robo-advisors after listening to @CBInsights

 

#Insurtech #Fintech #Finsurtech - the Rise of #Robo-Advisors

 

I listen to the webinar of CB Insights on robo-advisors. Here are my key take-aways as I am a board member in @Fundshop1

B2B Offering

There is a massive spikes in client accounts since the offering of B2B services. @Betterment reports 26k firms and 400 advisory firms using B2B services

 

Firms partnering with robo-advisors

Several banks and their investment wealth management arm are partnering with wealth tech startups with investments ...

 

... while others are taking the route of acquisitions

 

Insurers are entering the ETF game

Insurers are entering into ETFs with home-grown funds. 2017 vs 2016 = +30% and 2016 vs 2012 = 13x according to Bloomberg

 

Areas to watch

Voice and chatbot AI for robo-advisors could be the next step? Illustrative case of @Digit

 

 

 

#Insurtech #ReInsurtech - From seed to pre-seed_The cost of scaling has increased while the cost of starting has decreased.

Source : Crunchbase

As seed and series A rounds have grown increasingly larger over the past decade, a new category of funding has emerged: the pre-seed round.

What exactly is pre-seed? Since the round type is still new and evolving, there’s not yet a concrete definition of what defines a pre-seed firm. But industry observers say seed rounds today closely resemble what Series A funding looked like five to 10 years ago in terms of round size and valuation. So, it’s probably safe to say that pre-seed capital is what seed funding was 10 years ago.

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But just why is there a need for another stage in capital?

In October, Crunchbase News’s Jason Rowley wrote that the number of seed and angel deals increased by 8.77 percent in the third quarter of 2017 compared to year-ago period. However, total dollar volume fell over the same timeframe. Rowley continued: “Globally, seed and angel-stage companies raised $380 million less in Q3 2017 than they did in Q3 2016, a decline of just over fifteen percent..”

Rowley also found that “[c]ompared to last year, the average early-stage round is now $4.6 million larger, corresponding to a year-over-year change of 43.4 percent.”

All this backs up the notion that investors aren’t putting as much into seed rounds as they used to – thus leaving a hole attempting to be filled by this new breed of “pre-seed” firms.

To fill the gap, a handful of funds have recently formed to exclusively invest in the new and evolving “pre-seed” stage: Afore Capital, XFactor Ventures, K9 Ventures, Notation Capital, and Precursor Ventures.

Meanwhile, a number of other firms may not have an exclusive focus on pre-seed investing but are still doing some of it, such as Village Ventures, NextView Ventures, betaworks ventures, Initialized Capital, Bolt, Resolute.vc, and Brooklyn Bridge Ventures.

Deals Before Deals

Among the largest of these new pre-seed firms is San Francisco-based Afore Capital, which closed on a $47 million fund in May 2017, exceeding its $40 million goal.

Both co-founders, Anamitra Banerji and Gaurav Jain are engineers by training, both having worked as founding product managers – Banerji at Twitter and Jain at Android Nexus. After a collective 16 years in the operating world, they both went into institutional investing – at different firms.

They decided to join forces in 2016 and launch Afore. The premise behind the firm is that a median size seed round has increased from $1 million to somewhere between $3 and 5 million.

In setting up their fund, the founders performed an analysis of more than 180 unicorn companies—startups valued at over $1 billion—and their earliest funding rounds. They found that, in the U.S., more than one-third of those unicorns started with rounds that today would be considered pre-seed level, including Uber ($200,000), Airbnb ($620,000), Stripe ($120,000), Lyft ($300,000), and Pinterest ($600,000).

Since October 2016, Afore has made 17 investments, the majority of which it leads. Its average deal size ranges from $300,000 to $600,000.

Photo credit: Christophe Testi for Afore Capital

“We found that more often, companies were not raising seed as the first money going into a company,” Jain said.  “There has been a fundamental shift with investors telling founders to raise an angel, or friends and family, round and then build the product and some traction before coming to them for funding.”

Afore’s aim is to institutionalize that angels, friends, and family round.

“What was once a Series A is now a Series B and what was once a Series A is now a seed round,” Jain said. “So we saw a market opening to start a venture fund that fills the gap. The same thing happened 10 years ago when seed funds got started.”

The pair is quick to point out that they are not replacing angels, but rather working collaboratively with them.

“We’re complementary to angels but a very different product set,” Jain added. “We’re writing a much larger check, for starters, while angels tend to be more strategic.”

The changes can be confusing for founders, noted Banerji.

“Today a seed round is more like $3 million so another term has to be invented to address what used to be seed stage investing,” he said. “So there’s this gap between what a founder is looking to raise and traditional seed funds are willing to invest that is getting larger and larger. We’re looking to fill that gap with an institutional grade fund.”

Looking ahead, the pair believes this is just the beginning.

“We don’t see this as a fad,” Jain said. “The cost of scaling has increased while the cost of starting has decreased. So we think the notion of pre-seed funding is very much here to stay. It’s fundamental to the venture ecosystem.”

The pair acknowledges that investing at such an early stage is riskier than at a later stage.

“But we believe that companies that are able to raise less than $1 million with a concrete product roadmap and distribution make for more robust companies when they get to the seed stage,” Jain said. “So those with more early traction come out ahead in our opinion.”

Seeds On (Pre)Seeds

Jenny Lefcourt, a general partner at Freestyle Capital, a standard seed-stage focused firm, welcomes the new generation of investment firm that is pre-seed.

“Typically our entrepreneurs are raising $2.5 million to $3 million, and we’re writing a check for about $ 1 million,” she said. “Most of the companies that are ready for that have proven something, have had some traction and have built a team.”

The cost of scaling has increased while the cost of starting has decreased.

Before pre-seed came on the scene, it was mostly angels and friends and family that had capitalized the company to get to a place where they were ready for a firm like Freestyle.

“It’s impacting us in a positive way,” Lefcourt said. “They’re in a stronger place when they come to us even if it’s the same amount of capital raised.”

For its part, Freestyle has participated in rounds with pre-seed firms such as Precursor Ventures but still maintains its status as a seed investor. Lefcourt agrees, however, with the Afore team that the terms of what constitutes a seed round has changed over the years.

“Seed never existed back in the day until Series A rounds got larger. Series A has moved up further and seed too has moved up further and gotten larger,” she said. “So I do think pre-seed is serving an important role in the ecosystem.”

Doing A Lot With A Little

Earlier this month, Conversive – a startup that helps businesses build the virtual equivalent of face-to-face conversations – closed on a $600,000 round of pre-seed funding.

Kevin Lenane, co-founder of Conversive, said via email his company’s technology-heavy product and the need to get to market quickly made it important for the company to raise money earlier than “normal.”

“We are helping define a new domain in conversational technology and there is an abundance of new entrants in the space,” he wrote. “The earlier we can take some funding, the earlier we can start building the business, putting us higher up on the food chain once the market itself matures.”

Whether pre-seed venture firms are here to stay or just a short-term phenomenon remains to be seen, but one thing is for certain: the venture landscape is changing in a fundamental way and the firms and founders that can swiftly adapt will likely be a step ahead.

#Insurtech #Reinsurtech #Claims - How Cloud AI will impact the insurance industry? Presentation at Cloud Expo

How Cloud AI will impact the (Re)insurance industry? from Minh Q. Tran

#Disruption in #Insurtech, can it happen? @Nokia in @ForturneMagazine 10 years ago when I left #Nokia #Ventures

#Insurtech - @Minh_Q_Tran at @CEE_Paris : How Cloud AI will impact the insurance industry

Here is the conference link = www.cloudexpoeurope.fr/speaker2017

 

China and Asia poised to take the lead on #insurtech: WTW report - Commercial Risk

Insurance penetration in Asia-Pacific may be as little as a third of the global average but it could lead the world when it comes to the development of the insurtech market. This is the finding from a report issued by global broker Willis Towers Watson (WTW), its Third Quarter Insurtech Briefing. Much has been made of the disruptive potential of…

via www.commercialriskonline.com

QBE partners with #insurtech firm to develop policy automation - Commercial Risk

Insurance group QBE has announced plans to implement machine learning technology in order to automate its policy review process and develop more efficient underwriting. The plan is the result of a partnership it has struck with insurtech firm RiskGenius, a machine learning company aimed at carriers, brokers and regulators looking to analyse policy and endorsement language. The proof-of-concept platform will…

via www.commercialriskonline.com

#Insurtech - @WebSummit at #StartupUniversity = Honored to speak in Lisbon with Christine Herron (@Christine) and #DickKramlich moderated by @rhhackett