Starting a business in any market space can be a daunting process.
There are a number of decisions to make to help the startup stand out from others, along with plans to put in place before climbing the investment ladder.
Insurtech (insurance technology) is a growing market, with £218 million invested into insurtech startups in the first half of 2017, according to research from Accenture.
“The insurtech industry’s rapid growth reflects investors’ response to consumer appetite for change in an industry sitting on trapped value,” Roy Jubraj, insurance strategy and innovation lead at Accenture UK/I said in a statement.
New startup owners looking to delve into the market should consider following a strategy which will help to make the business a success.
Here’s our advice on building an insurtech startup, featuring insurance expert Mike Brockman.
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Think through the whole proposition
Mike Brockman is the CEO of ThingCo - a telematics technology manufacturing startup, and the former CEO and founder of insurethebox. Brockman has years of experience in the insurance sector and has since been helping startups in the insurtech space with tips on how to build up their own companies.
Speaking at Startupbootcamp in London, Brockman advised the large crowd and cohort of startups to “think through your proposition from start to finish".
As a startup owner himself, Brockman explained the importance of core thinking to deliver action.
“Like the advice I give all new startups, you have to think through all the things that you have to do and there’s an enormous list, an enormous number of people that you’ve got to work with to make this rather simple concept actually work,” he told Techworld.
"Think through the whole stages of evolution in order to get your product live out to customers, whether they are B2B or B2C and think of all the things that could go wrong before they go wrong and how you would tackle them,” he added.
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Generate revenue quickly
It is important to outline the financial requirements to keep the startup standing. As clear as it sounds, many business owners struggle with finance when starting up.
Research figures from Plusnet in a survey amongst 500 UK startups found 29 percent of small business owners see access to finance as one of their biggest challenges.
The research also showed that 48 percent of UK startups find it difficult to raise investment, with majority struggling to get investments in their first pitch.
“Make sure that you find some means to get some revenue in quite quick, because as I mentioned, when you’re a new startup worrying about cashflow and capital raising is a worry and a big distraction to you just getting on with your business,” Brockman said.
“Investors always like to see a bit of progress and if you can find some means, even if it’s not your core proposition, to get some sort of income in it actually makes you feel quite good,” he said. “The way I’m doing that at ThingCo is getting benefits because they’ll see the value of the device from an insurer point of view and I’m also getting some revenue for teaching them how to reduce risk.”
Work with like-minded people
Brockman shares his thoughts on partnering with like-minded people. For many startup owners finding the right team members can be a struggle. This is also the case when finding investors. Startups are more likely to receive investments from those that believe in the business.
“The old adage is work with people that are like-minded to yourself, because if you have a business partner or investor that doesn’t think like yourself they will cause you a problem,” he added. “You’ve got to have forward-looking people involved in your business otherwise it causes problems.”
Some may find it tough working with people in the insurance industry due to their fear of innovation. Many traditional insurers are reluctant to embrace change.
“I’ve been in insurance all my life, but unfortunately it’s a very, very risk adverse industry. If you talk to people in insurance they tend to have a very negative view of new ideas. I don’t know whether that’s because they see it as a threat, or just because they deal with risk they just think of all the bad things that are going to happen.
“I share startups frustrations, but really they’ve just got to sort of ignore any negativity and really believe themselves in their own propositions and find partners that are like-minded,” Brockman said.
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Make sure you’re heading in the right direction
Last but not least, one of the critical points to building an insurtech startup to keep focus of direction. You may have a solid business structure, but it is easy to get distracted and feel the pressure of rejections and setbacks you’ll inevitably face.
“A lot of people have good ideas, and especially when it comes to technology, but there are lots of practical things that they will have to get to grips with in the future in terms of the operations,” he said. “How are they actually going to sell their product, what sort of strategic partners do they need in order to align themselves with in order to be successful, what sort of people do they need to recruit.”