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Insurance Against Startup Failures

Insurance Against Startup Failures
July 17, 2020

Insurance against startup failures is not a joke but an actual product that is gaining momentum in the current environment. 

Insurance probably isn't the first thing that jumps to mind for budding entrepreneurs, and it probably won't come up until there's an issue: an aggrieved co-founder wants to split; an employee slips on a puddle; the database gets hacked — all things which could happen and for which a company could use coverage.

Most existing insurers aren't geared toward the operating model of tech startups. Business insurance is usually tailored towards a restaurant or a retailer who faces a different set of challenges than a tech company. 

Vouch, an insurance company catering to tech startups, was born last year out of the need to provide the right safety net for startups. The company has since expanded its insurance offerings to a total of 22 states, including tech hubs like California and Massachusetts (although not Washington or New York).

The company just announced that it is expanding beyond early-stage startups to serve companies that have raised series B funding rounds and beyond. It will now insure startups that have up to 150 employees, that have raised as much as $75M, and that have sales volumes of less than $35M. Essentially, the company is growing to meet the needs of some of its earliest clients as they grow. With this change, Vouch says its services are now available to nearly 80% of U.S. venture-backed startups.

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Insurance Companies for Startups:

Embroker is an insurance company tailored to startups. It doesn’t retain any risk itself, but instead matches organizations of between 10 to 1,000 employees with policies from over 50 commercial carriers. Some policies are custom-built for verticals like technology and come with “data-driven” guidance provided by a team of insurance advisors, plus real-time claims tracking and instant certificates of insurance. Companies can track and manage assets and vendor certificates online and customize requirements by project, while receiving notifications for noncompliant and expired policies or adding variables like property location information.

San Francisco startup CoverHound, which was founded nine years ago by industry veterans hailing from Unitrin Direct and InsWeb, has ridden the insurance digitization wave pretty successfully. It has sold more than 200,000 policies to date and in 2016 moved into the cyber insurance sector through its subsidiary, Cyberpolicy. It's now raising cash to fuel growth to come.

CoverWallet was founded in 2015 by technology entrepreneurs Inaki Berenguer and Rashmi Melgiri. It has more than 300 employees across engineering, digital marketing, data science, business intelligence, design, and operations, with offices in New York City, Rochester, N.Y., and Spain. In May 2019, Aon partnered with CoverWallet to serve clients in Australia.  In conjunction with this agreement, CoverWallet received a strategic investment of an undisclosed amount from Aon.

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808 Profiles Updates | 113 M&A Deals144 Funding Activities

Funding & Deal Highlights:

Glympse Bio raises more than $46M in Series B round for biosensor technology. The company is developing biosensors, initially for nonalcoholic steatohepatitis (NASH), that could be used in place of liver biopsy and have applicability in the development of drugs for the disease.

Gyant, whose AI-enabled health platform is designed to drive patient-doctor engagement, closes a $13.6M round. The company says the funding will support its ongoing product development, operational, and interoperability efforts.

CampusLogic’s new $120M growth investment will help the education technology company expand its student financial success platform. The Phoenix-based company provides financial tools and resources to help the 15M students who attend colleges and universities understand the processes that often create barriers to student enrollment, engagement, and retention.

Caption Health, a company that develops artificial intelligence software for health care providers, raises $53M in a Series B. Caption Health wants to use its software to make specialty diagnostics accessible for every patient exam. Specifically, Caption AI lets health care providers who don’t have specialized training perform ultrasounds and get diagnostic-quality images.

Prosperity Behavioral Health and Vertex Healthcare Services, two leading providers of financial services and solutions to the behavioral healthcare industry, announce that they have merged. This union significantly increases the depth and breadth of available services, creating a seamless end-to-end solution for clients seeking revenue cycle management, accounting and vendor management, data analytics and reporting, and M&A transaction support services. The combination will also allow accelerated development of proprietary technology initiatives. The combined company will serve a national customer base with comprehensive resources on both coasts.

In an undisclosed deal, Structured Social announces the acquisition of one of the industry's top e-mail and retention marketing agencies, Boundless Labs.

Tilting Point has acquired all of Plamee Studios and the assets of FTX Games from gambling technology software firm Playtech in Estonia, adding to Tilting Point’s growing portfolio of mobile games.

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