Ladder raises $100M on a $900M valuation for a platform selling flexible-term life insurance

Life insurance has had a new lease of life in the era of insuretech, and today one of the companies building a business out of rethinking everything — from target customers through to how to provision and pay for insurance, and how much coverage to give — is announcing some funding on the back of strong growth. Ladder, which providers flexible-term life insurance policies providing coverage ranging from $100,000 to $8 million, has raised $100 million in equity funding, a Series D that values the company at $900 million.

At a time when mortality is perhaps more present than usual to the average person — thanks, Covid-19 — Ladder has had a really strong year, with revenues growing four-fold (exact amount undisclosed). The Palo Alto-based startup, which operates in the U.S. only today, is on track to issue $30 billion in coverage by the end of this year.

(The company’s valuation is also a measure of that 4x growth: PitchBook estimates that in its last fundraise, in 2020, it was valued at around $238 million.)

Thomvest Ventures and OMERS Growth Equity co-led the Series D, and the company is not disclosing who else is in the round. Previous backers include strategics like the venture arms of Allianz Life and Northwestern Mutual, along with RRE, Canaan Partners, Lightspeed and others.

A wave of startups have emerged in the last several years with a mission to rethink the insurance model. Tapping into some of the same trends we are seeing in fintech, companies are leaning on technology built by others and embedding functionality by way of APIs to provide tools to people to find and get pricing for insurance policies.

Their unique selling points become easier-to-use interfaces on the web and via apps; a wider range of options in terms of pricing and coverage; and using algorithms and other new technology to produce quotes, close deals and initiate coverage much faster.

They are also targeting new demographics — for example Hedvig in Europe, which is focused on providing insurance services primarily to people under the age of 30. Others include the likes of Lemonade; Marshmallow in the UK rethinking inclusive car insurance; YuLife presenting life insurance as a gamified, wellness-focused offering; Bima targeting emerging markets; Ethos lowering the barrier to entry for getting life insurance products; and so on.

By providing flexible terms policies that can be searched for and purchased online, Ladder’s approach is in the same realm as many of these, with the added critical detail that it is vertically integrated, building not just user-friendly and modern interfaces and the risk-based algorithms that determine pricing, but also the underwriting, instant issue, and policy administration.

As with other vertically integrated approaches, this may give Ladder more operational overhead, but also potentially providers it with significantly more control around how it designs policies, how it can implement updates and changes, and of course in the long term, the margins it makes on sales, or conversely the savings it can pass to users. Ladder today claims to provide 40% savings to users compared to others on the market.

“I know first hand how life insurance can change a life,” said Jamie Hale, CEO and Co-Founder at Ladder, in a statement. “With our carrier in operation and this new round of funding, we are in the position to greatly accelerate innovation in service of families and communities. I am so excited to see our original vision continue to materialize.”

“The world is only becoming more digital, not less, and the life insurance industry to-date has been slow to modernize,” said Don Butler, MD, Thomvest Ventures, in a statement. “We are excited to invest in Ladder’s vision to build the digital life insurance company of tomorrow, and their announcement today that they are the first in operation shows that they are outpacing the industry.”

“Jamie Hale and his visionary management team are building Ladder into an innovative, market- leading digital life insurance company,” added Saar Pikar, MD and fintech lead, OMERS Growth Equity. “We are very pleased to count Ladder as OMERS Growth Equity’s first direct fintech investment – as well as our entry in the insurtech space, expanding on the insurtech presence established by our OMERS Ventures colleagues. We believe that the company offers a truly transformative approach, including through its efficient adjudication of risk and enhanced user experience.”

Insurtech startup Obie raises $10.7M Series A led by Battery Ventures

Obie, which has developed an insurtech platform for landlords, has raised $10.7 million in a Series A funding round led by Battery Ventures.

Thomvest Ventures, Funders Club, MetaProp and Second Century Ventures also participated in the financing.

If this sounds like a niche offering, that’s because it is. Obie’s software specifically targets small-to-medium size apartment landlords who own single-family rentals and/or larger apartment buildings.  

Chicago-based Obie — which also went through the Y Combinator program — says its platform stands out because it offers instant quotes (by instant, they mean in about three to five minutes). The company also claims to save policyholders up to 25-30% compared to other insurance premiums. Over the past year, Obie has secured insurance for over $3 billion worth of property.

Obie co-founders (and brothers) Aaron and Ryan Letzeiser have taken their respective backgrounds in insurance and real estate private equity to build out the Obie platform. They are operating under the premise that despite being the largest class of real estate investors in the U.S, this group of landlords “is significantly underserved.”

“Generally SMB landlords have been ignored in the market, and there’s 11 million of them,” Aaron said. “And we beat target premiums, on average, by 31.7%.”

The demand appears to be there. According to the pair, Obie saw its premiums climb to about $1 million in its first 12 months of being in business. Over the last 12 months, that number has climbed to about $10 million.

In conjunction with its funding announcement, Obie also announced today the extension of its property and casualty insurance to all 50 states.

Image Credits: Obie

So, how does it work? Landlords and investors answer a series of questions on Obie’s site. The platform extracts a few data points from client responses, which its technology then combines with public and private data points such as the proximity of the landlord to the property. (This can be an indicator of how quickly a landlord can conduct proactive and preventative maintenance and general attentiveness to tenant issues.) 

Once Obie runs its analysis, the platform uses a “proprietary” algorithm to match an application to carriers based on what they describe as “risk-appetite” profiles. For example, some carriers don’t want to cover properties built before a certain year. The platform then provides the landlords and property owners with a quote. If they’re OK with the quote, landlords can be “immediately underwritten,” according to the company. 

At its core, said Ryan, the brothers want to make Obie “the easiest way for landlords to get the insurance that they need.” 

The company plans to use its new capital to expand upon its product and “really try to own the entire vertical.”

“Historically, we’ve been an agency-based business but we are in the process of putting together our own product that is slated to roll out right at the end of the second quarter,” said Aaron. “Very similar to Lemonade and Hippo, and we’re doing it with a large insurer that’s backing us.”

In other words, Obie believes it has validated its brokerage model in the market and is now planning to use the data it’s been able to gather to become its own carrier. The company expects the rollout to take time, so until it gets approval in all 50 states, it will partner with other carriers.

“Our goal at the end of the day is to go from agency to eventually carrier,” said Ryan. “This is a tried and true path. Next has done it. Hippo has done it. Lemonade has done it.” 

The brothers believe their backgrounds allow them “to speak the same language” to their clients. 

“We have lived the pain points of our clients so we can understand how the price of the premium of coverage experience plays into the overall business strategy,” Aaron said.

Battery Ventures’ Michael Brown, who has taken a seat on Obie’s board, agrees the embedded nature of the startup’s offering gives them a competitive advantage.

“Allowing their end customers to buy professional liability or general liability or commercial auto right from the vertical software that is servicing their business is really interesting and a great distribution channel for Obie,” Brown told TechCrunch. “Landlords can go direct or through their channel partners.”

Brown says Battery — as long-term investors in the insurance sector — was also attracted to the fact that Obie is focused on commercial lines rather than personal because the firm believes “they are larger markets, less competitive and can probably drive higher value just given the overall size of the premiums involved.”

Leading VCs discuss how COVID-19 is impacting real estate & proptech

Several months ago, we surveyed more than 20 leading real estate VCs to learn about what was exciting them most in the real estate tech sector and hear their opinions on proptech trends like co-working, flexible office space and remote office space.

Since we published our survey, COVID-19 has flipped the real estate sector on its head as more companies move toward mandatory remote work, retail businesses are forced to temporarily shut their doors and high-traffic properties thin out. Suddenly, the traditionally predictable world of real estate is more chaotic and unclear than ever.

What are the short and long-term impacts of pandemic-induced volatility? Does this open up opportunities for proptech startups or shutter them? What does this mean from an investing point of view? We asked several of the VCs that participated in our last survey to update us on how COVID-19 is impacting real estate startups, non-proptech companies in general and the broader real estate market overall:

Christopher Yip, RET Ventures

Despite its banner year in 2019, proptech will not be immune to the pressures venture-backed companies face in a market pullback, and we are preparing ourselves and our portfolio companies for a bumpy year.