During my time at Kohort, one of the tasks that fell under my responsibility was assisting with the purchase of insurance for the company. We had just raised $3 million in seed money and we were a legitimate company. Legitimate companies need insurance. No one really wants to spend money on something from which you don’t really see the benefits (until you really need it), but it’s a necessary cost of a business.
The search process for finding a good insurance broker was an absolute time-suck. Not only did we have to find a broker who could provide us with the necessary lines of insurance, but we had to find someone who we could trust, because to be honest with you we had no clue what type of policy we needed. So, like any search process there are always a few standard steps you take. You “Google” your way around the Internet to find some answers. You ask around for recommendations from others who have been in a similar situation. You seek advice from your investors. We ultimately came across all of these problems:
- Insurance is a massive and complicated industry and there was no way we would be able to figure out everything we needed to know.
- Every person we asked (every startup CEO, every VC, every friend) had a different answer to our questions of where to go.
- Every broker we spoke to had next to zero experience working with startups. Do you know what it’s like to explain your business to an insurance broker? It’s like trying to explain Tumblr to your 90 year old Grandma.
There are thousands of brokerages out there all promising to be the best, but unfortunately they have close to no understanding of the fast-paced and incredibly agile startup world. Not only that, but they focus all their energy and marketing resources on real estate, healthcare and other old-school industries, which explains the absence of a well-known and trusted brand that focuses on the startup community.
Finding a broker took up a lot of my time. Time that could have been spent much more effectively in other ways. Not only that, but at the end of it all we still barely had a clue what we actually purchased. If you take a look at any insurance brokerage website I think the problem is clear. There is just a complete disconnect between startup world and the insurance industry. A broker needs to have a very strong understanding with the business and space their clients are in. This will help tremendously with understanding the client’s needs which ultimately leads to better coverage and lower premiums.
This is why I started Founder Shield and why I have such an undying passion for what I am doing. Startup culture is all about disrupting and modernizing old-school industries so that they can properly service the needs of their ever-changing, better educated and more technologically advanced clientele. Startup Land is here to stay and service industries need to adapt to this growing space.