Ascend on Wednesday it announced a $ 5.5 million seed round to promote its insurance payments platform that combines financing, collections and accounts payable.
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, the CEO of Vouch. Insurance, Sam Hodges, Layr Insurance CEO Phillip. Hodges, Anzen Insurance CEO Max Bruner, Counterpart Insurance CEO Tanner Hackett, former Bunker Insurance CEO Chad Nitschke, SageSure CEO Paul VanderMarck, Instacart co-founders Max Mullen and Brandon Leonardo, and Houseparty co-founder Ben Rubin.
This is the first funding for the company that is active in 20 states. Developed Payments APIs to automate end-to-end insurance payments and to offer a buy now, pay later financing option for carrier commissions and accounts payable distribution, something that co-founder and co-CEO Andrew Wynn, He said it was pretty unique to commercial insurance. .
Wynn founded the company in January 2021 with his co-founder Praveen Chekuri after working together at Instacart. They originally founded Sheltr, which connected customers with trained maintenance professionals and acquired by Hippo in 2019. While working with insurance companies, they recognized how quickly the insurance industry was modernizing, but insurance salespeople still struggled with customer experiences due to outdated payment processes. They started Ascend to solve that payment problem.
The insurance industry continues to operate largely on paper and pencil – some 600 million paper checks are processed each year, Wynn said. He referred to insurance as a “money movement spaghetti web” in which payments can take up to 100 days to reach the insurance company from the client as it makes its way through intermediaries. Plus, one of the only ways insurance companies can make a profit is by taking those hundreds of millions of dollars in payments and investing them.
Home and auto insurance can be broken down into payments, but the business side isn’t that customer-friendly, Wynn said. Insurance is often paid in a single annual sum, however paying tens of thousands of dollars in a single payment is not something all business customers can manage. Ascend offers point-of-sale financing to allow insurance brokers to divide those business payments into monthly installments.
“Insurance companies continue to focus on annual payments because they have no other option,” he added. “They want all their money up front so they can invest it. Our platform not only reduces friction with payments by allowing customers to pay how they want to pay, but it also helps operators sell more insurance. “
Startups like Ascend that aim to revolutionize the insurance industry are also attracting venture capital, with recent examples including Witness and Marshmallow, which raised close to $ 100 million, while Insure raised $ 100 million.
Wynn sees other companies making top-down payment software for other industries, like health insurance, which he says is a “good sign of where the market is going.” This is where Wynn believes Ascend is competing, although some incumbents are offering premium financing, but not in the digital way that Ascend does.
It intends to roll out the new funds in product development, go-to-market initiatives, and new hires for its New York and Palo Alto locations. He said the increase attracted a group of angel investors in the industry, who were looking for a product like this to help them sell more insurance rather than building it from scratch.
With only about eight months having passed, it’s a bit early for Ascend to have some growth to discuss, but Wynn said the company signed its first client in July and six more in the last month. The clients are large digital insurance brokerages and collectively account for $ 2.5 billion in premiums. It also hopes to obtain a license to operate as a full payment processors in all states so that the company can be in all 50 states by the end of the year.
The ultimate goal of the company is not to replace brokers, but to offer them the technology to be more efficient in their operations, Wynn said.
“The runners are here to stay.” “What will happen is that technology-enabled brokers will be able to serve clients nationwide and manage their businesses, collect payments, finance premiums and reduce friction from backend operations.”
Bill Trenchard, a partner at First Round Capital, met Wynn while he was still with Sheltr. He believes insurtech and fintech are following a similar story arc in which disruptive companies go to market with less friction and better products, and by going digital first, they can find customers where they are.
By moving digital payments to insurance, Ascend and others will lead the market, which is so huge that there will be many 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 trillion by 2028.
Like other firms, First Round looks for equipment, product and market when evaluating a potential investment, and Trenchard said Ascend checked those boxes. He not only liked how quickly the team moved to build momentum around him in terms of securing first pilots with clients, but also getting well-known digital blue-chip companies onboard.
“The magic is in how to automate underwriting, how to create a data moat and be the first to move – 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.”