Ascend on Wednesday announced a $ 5.5 million funding round to advance its insurance payments platform that combines funding, collections and debt.
First Round Capital led the round and was joined by Susa Ventures, FirstMark Capital, Box Group and a group of angel investors, including Coalition CEO Joshua Motta, Newfront Insurance executives Spike Lipkin and Gordon Wintrob, CEO of Vouch Insurance Sam Hodges, CEO of Layr Insurance Phillip. Hodges, Anzen Insurance CEO Max Bruner, Counterpart Insurance CEO Tanner Hackett, former Bunker Insurance CEO Chad Nitschke, SageSure director Paul VanderMarck, Instacart co-founders Max Mullen and Brandon Leonardo and the co-founder of Houseparty Ben Rubin.
This is the first funding for the business that is live in 20 states. He has developed payment APIs to automate end-to-end insurance payments and to provide a buy now, pay later financing option for distribution of carrier commissions and debts, something the co-founder and co-CEO Andrew Wynn said was rather unique to commercial insurance.
Wynn started the company in January 2021 with co-founder Praveen Chekuri after working together at Instacart. They initially launched Sheltr, which connected customers with qualified maintenance professionals and was acquired by Hippo in 2019. While working with insurance companies, they recognized the speed at which the industry. Insurance was modernizing, but insurance sellers still struggled with the customer experience due to outdated payment processes. They launched Ascend to solve this payment problem.
Much of the insurance industry still operates on paper and pen – some 600 million paper checks are processed each year, Wynn said. He called insurance a “spaghetti network of money movements” where payments can take up to 100 days to reach the insurance company from the customer as they go through intermediaries. Plus, one of the only ways insurance companies can make a profit is to take those hundreds of millions of dollars in payments and invest them.
Home and auto insurance can be broken down into payments, but the business side isn’t quite as user-friendly, Wynn said. Insurance is often paid once a year, however, paying tens of thousands of dollars in a single installment is not something every business customer can handle. Ascend offers point-of-sale financing to allow insurance brokers to split these commercial payments into monthly installments.
“Insurance companies continue to focus on annual payments because they have no choice,” he added. “They want all of their money up front so they can invest it. Our platform not only reduces friction with payments by allowing customers to pay the way they want, but also helps carriers sell more insurance.
Startups like Ascend aiming to disrupt the insurance industry are also attracting venture capital, with recent examples such as Vouch and Marshmallow raising nearly $ 100 million, while Insurify raising $ 100 million.
Wynn sees other companies creating verticalized payment software for other industries, such as Medicare, which he says is “a good sign of where the market is going.” This is where Wynn thinks Ascend competes, although some incumbents offer premium funding, but not in the digital way Ascend is.
It intends to deploy the new funds in product development, go-to-market initiatives and new hires for its New York and Palo Alto sites. He said the increase had attracted a group of angel investors to the industry, who were looking for a product like this to help them sell more insurance rather than building it from scratch.
Only about eight months old, it’s a bit early for Ascend to discuss growth, but Wynn said the company signed its first client in July and six more in the past month. The clients are large digital insurance brokerage firms and together account for $ 2.5 billion in premiums. It also expects to be licensed to operate as full payment in all-state processors so the company can have a presence in all 50 states by the end of the year.
The company’s ultimate goal is not to replace brokers, but to provide them with the technology to be more efficient in their operations, Wynn said.
“Brokers are here to stay,” he added. “What will happen is that brokers with the technology will be able to serve clients nationwide and run their businesses, collect payments, fund premiums and reduce friction associated with trading. backend operations. “
Bill Trenchard, partner at First Round Capital, met Wynn while he was still at Sheltr. He believes insurtech and fintech follow a similar story arc where disruptive companies will market with less friction and better products and, being digital first and foremost, are able to meet customers where they are.
By moving digital payments to insurance, Ascend and others will dominate the market, which is so large that there will be plenty of opportunities for businesses to be successful. The global commercial insurance market was valued at $ 692.33 billion in 2020 and is expected to exceed $ 1,000 billion by 2028.
Like other companies, First Round looks for a team, a product and a market when evaluating a potential investment and Trenchard said Ascend checked those boxes. Not only did he love how quickly the team was moving to build momentum around them in terms of securing early pilots with customers, but also bringing well-known digitally driven companies on board.
“The magic is in how you automate the subscription, create a data gap and be a trailblazer – if you can do all three, that’s great,” Trenchard said. “Instant approvals and using data to do a better job than others is a key benefit and will change the way insurance is bought and sold. “