|
Hello Reader,
Remember when everyone thought InsurTech would revolutionize the insurance industry overnight? Well, Gilad Shai just dropped some brutal truth bombs that every founder needs to hear. After running InsurTech LA for nearly a decade and watching the sector's boom-bust cycle up close, he's seen it all: the IPOs that lost 90% of their value, the startups stuck in permanent purgatory, and why insurance companies still won't buy your software.
But here's the kicker: he still thinks it's worth building in this space. You just need to know what actually works (spoiler: it's not what the VCs told you in 2021).
Upcoming Events:
– Gopi Rangan, Host of the The Sure Shot Entrepreneur podcast
Startup Corner: Juno
Juno was recently named one of Fast Company’s Most Innovative Companies of 2026, a valuable recognition among companies that combine cutting-edge technology with deep human understanding.
Juno tackled a problem no one wanted to touch: what happens when your kid gets seriously ill and you have to leave work?
They're not trying to disrupt traditional insurance. They created an entirely new category. Parents can receive up to $500,000 per child if severe illness strikes, paid monthly over 10 years. Use it for anything: lost wages, specialized care, home modifications.
In one year, they've hit 50,000 covered members across nearly 100 employers. The premium? Just 0.1% of what companies spend on benefits.
|
|
|
|
|
New Podcast: InsurTech is still worth building; you just need to know what actually works
In Episode 187, my guest is Gilad Shai from BMI Capital. Gilad is all about insurtech and he doesn't sugarcoat it. In 2021 when insurtech companies attempted IPO’ing, they had rough go of it in the public markets. Wall Street analysts took one look and said, "Your combined ratio shows you're losing $5 for every dollar you make." The stock prices crashed 90%. "They were valued as software companies," Gilad explains, "but insurance has its own physics." The founders who survived understood something crucial: insurance companies grow through M&A, not product innovation. Legacy will buy other insurance companies all day long, but a software startup? "It's outside their DNA."
His advice is refreshingly practical. First, understand the challenges of selling to carriers. Second, if you're below $5 million in revenue as a pure software play, you're stuck. No one will buy you. Third, stop trying to boil the ocean. One startup sold for a nice exit doing nothing but processing risk appetite PDFs – a feature Gilad considered trivial.
"Interview agents, brokers, adjusters," he insists. "They're the cogs that make the beast move."
|
Connected Insights: Competition is irrelevant when you're building infrastructure
In episode 81, Matt Harris from Bain Capital Ventures offers a different perspective that perfectly complements Gilad's reality check. After 30 years investing in fintech and InsurTech, Matt has a simple philosophy: "I overwhelmingly prefer backing B2B companies with little to no credit risk."
Why? Look at the consumer-focused InsurTech companies. "All the ones that have gone public are trading for less than cash," Matt observes. But the infrastructure plays? Different story entirely.
Matt's sweet spot is what he calls "embedded fintech" – software companies that monetize through financial services. These aren't insurance companies pretending to be tech companies. They're tech companies that understand how to leverage insurance as a revenue stream.
The key insight: stop competing on traditional insurance metrics. "The consumer-focused incumbents aren't terrible," Matt admits. Instead, build the picks and shovels that everyone needs. That's where the real opportunity lies – not in disrupting State Farm, but in building the infrastructure layer that even State Farm will eventually need.
|
|
|
|
|
Community Involvement: Gift of Life
Gilad supports Gift of Life, which facilitates bone marrow transplants for cancer patients. It's deeply meaningful work of matching donors with patients who desperately need transplants. Finding a bone marrow match is really hard. Even siblings have only a 25% chance of matching. For the broader population, it's one in a thousand. Yet Gift of Life has cracked the code through sheer scale and smart operations. They're one of only two accredited registries in the U.S. and recently opened the world's first registry-integrated collection center.
|
|
|
|
Have questions or feedback? Reply to this message and we will get back to you
This message is sent to Reader from: 616 Ramona St, Suite 20, Palo Alto, CA 94301
Unsubscribe · Preferences
|
|
|
