Fair insurance - fundraising in InsureTech. By Carey Anne Nadeau Co-CEO of Loop.

Let's get started and today's a guest speaker. We have Carrie and the DOE Co founder and Co, CEO at the loop and Lisa will talk about insuretech and specifically how Carrie and match to.

Start a company in insurance technology while having not a huge background in that field. So, Kerry, let's kick it off by. You're giving us some background on yourself and on loop.

Yeah, absolutely hopefully that introduction that we're going to talk about insurance. Is it too off putting to your audience? I think insurance is really fascinating. New exciting domain. That vc's are interested in.

You're seeing a lot of really amazing entrepreneurs move into. There's a lot of ideas and exits happening in the insure tech space. So, hopefully, as an attractive hook, rather than oh, my God.

I don't want to be stopped talking to this party Christmas party. But yeah, my name is Kerry and Nadeau.

I am the CO founder and of a company called loop and what Luke does is it tries to reimagined what auto insurance will be in the future. That is more data driven and more driven.

So we've gone through the way that a traditional sort of legacy carrier. All the names,
you might know,
Geico,

progressive,

all state USA we've gone through the way that they've priced customers and asked in what ways are the rating criteria that they use to give you a price structurally biased and perpetuating inequality.

So, we've gone through and identified a number of factors like your credit score, your educational attainment level, your occupation, all of, which can be used if say, you are lower credit, lower educated.

So you may only have a high school diploma. You may work in a blue collar job. We don't believe that. Those factors are particularly predictive of whether you're going to be involved in a car crash.

So we've actually gone through and removed those factors and instead replace them with this really cool mobile app. That tracks when, and where you drive and contextualizes where you drive with information about where it's unsafe.

So we've collected hundreds of millions of car crashes across the United States currently across 27 States, and we've mapped them. So, we know with your speeding, or if you're heartbreaking on some of the most dangerous roads in the US and in doing.

So we're able to better measure the risks. We actually.

What matters we actually predict who is likely to be involved in a car crash and make their risk match the rate that we price that.

At the same time, we're actually delivering that information back to the consumer so that a consumer can make better choices for themselves.

If your high school student is taking to the road for the 1st time, you can advise them take this exit instead of that exit or these roads. I don't want you to be driving on it too. In the morning.

There's all sorts of safety insights that we believe that as an insurance carrier, we're responsible to our customers and hopefully helping them become more safe. Not just be there when things go wrong, but actually help prevent things from going wrong to begin with.

So, Luke is just launched, will be live in the state of Texas this year probably Q2 Q3 this year. So if you're listening in the state of Texas, this will be a product that you can buy. Very soon.

Nice. That's a great introduction. Absolutely. Loved it and yes. Thanks for fixing me. In terms of we are not going to be talking about the board insurance. We're going to talk about the following part of insurance and 1st question.

Actually, before we jump into discussion of insurance is the thing that meant that saw, while I was preparing for these things for you just like 10 minutes before it, which is, that's your the at loop. So how does it work?

How is it the CO CIO position work? Yeah.

So we're Super intentional about setting up our company with my Co founder and name John Henry,

and he comes from discipline and a background of being just an amazing marketer brand builder.

We call him a social engineer. He knows how to build a brand and have conversations with consumers, they build authentic resident messaging around a mission.

And our mission as a company is to reduce the injustice at any quality, create a more equitable, fairly priced auto insurance products.

And myself, I'm a bit of a technical Co founder, so I have all the credentials and MIT graduate. I work for the Brookings Institution, the Urban Institute.

I bring this really deep expertise in technical proficiency when it comes to rating and the statistical algorithms that go into your price that's really my domain expertise and I think to be really successful of insurance,

you need founders with both of these skill sets.

So it was important to us as we're having conversations with many partners and our customers that are required to launch a business like loop that we have 2 of the best possible people at the very top of the organization able to make

executive decisions with their domain expertise we sort of.

Internally stay out of each other's lanes and defer to our own expertise when the occasion arises where the statistics is outweighing. And the importance of the numbers not lying outweighs a decision. Sometimes.

And then other times what we're hearing from the customer, and how we want to build the product to resonate with a customer outweighs and other times and so it's a, it's a balance of those 2 things. But it's really gives us an edge.

Because we have 2 people that are really competent leaders that can both make executive decisions in those domains, which are really important for being successful and insurance. Nice. That's a really interesting use case.

I've never seen before in common. It's common.

Yeah,
I think the heads of Warby Parker,

there's financial services firms that are as well find it's pretty common in financial services because there's so much to do so many players to interact with so many contracts to sign so many legal

requirements to actually get to be an insurance company,

and so it's quite common in financial services.

That's really cool. Yeah. Alerting something you on my own podcast every single time I recording episode, so thanks. Thanks for that. So, yeah, now let's talk about insurance 1st question is about how investors looked at your backgrounds.

So the 1st thing that investor usually do when they evaluate startup, they're like, okay, does the team actually qualify to solve this particular problem? And usually they just dig into their background to see if it's relevant to the problem that they're trying to solve and your chase.

It seems like you don't have much of a background insurance question is how investors react to that.

Yeah, well, correct the record for a little bit that I have spent 5 years in working in insurance, but I don't come from a big naming shirt or I've never worked for progressive or Allstate.

I've never been sort of worked up through the institution itself.

I think that's an asset for us, because we're able to see and understand how the institution has operated, how insurance carriers work and identify the flaws where we can do a better job.

A lot of what we do is driven by data big data, massive amount of information. We get like, 40000 crashes a month in the state of Texas. Do you think about that there 40000 car crashes?

There's way too many car crashes is way too many people at risk on the roads,

but it also fuels a really powerful engine of technology internally for organization to understand again and contextualize drivers behaviors,

but also learn what are the important contextual factors that end up causing a crash, it's not just the person's hands on the wheels and sometimes it is drunk,
driving,
distracted driving,

teen driving without a lot of experience.

You might weigh the person quite a bit. But we think the very big missing component is this idea of contextualizing. Where that driver is actually driving, and if you're on a road, that's Super dangerous and you're behaving poorly.

Our data and internal engine is able to compute. How important is that? And how should your rate reflect that risk?

So, unlike a traditional carriers approach, that relies on a really structured set of rules that have been established for hundreds of years. We don't have the same handcuffs.

We have a little bit more freedom in our approach to actually ask what rules we want to follow. What rules do we think are important to continue perpetuating? So, for example, we might want to remove something like credit score.

From your auto price today credit, zip code income, these sorts of factors account for about 80% of your price. And it's no surprise that people of color end up paying 50 to 70% more on average than people who are white.

Even when their equivalence have convictions, I mean, it's just an extreme consequence of some of the structural questions that you're asked in the process of obtaining an insurance quote.

So we're able to have that flexibility to say, is this the way that we want to do business.

Is this reflective of the data that we're collecting because the data don't lie and how do we want to be a part of designing what the future will look like even if that's harder even if that means we have to invent even if that means we have to apply

creative solutions to problems that have already been solved for hundreds of years.

That's what we're taking on. So, I think it's a really great asset to actually come from outside of the industry, but have very specific skills that are relevant to the industry that gave us that advantage.

I will mention though, when it comes to investors myself, I'm a female tech founder. I don't know that there's a lot of us out there in the world. We've mostly found each other through the underground network of female tech founders.

My partner and Co, founder is a Dominican American male and so we don't look like the traditional financial services.

Employee or entrepreneur, most of the businesses like root, like lemonade, like Hippo no fault of their own.

But you've seen these very big companies grow and be led predominantly by white men and I think that gives us a really strategic advantage.

Frankly, we've also found investors that believe that this is an advantage for us that we have different life experiences. We've perceived the world differently. We know what it's like to be without a car and he loved groceries over our shoulders and big bags.

How difficult it is to go lose your car in a car crash I'll be able to bring your kid to child care, which then affects your ability to work or your ability to access jobs to begin with. That may be further a field.

And so I think we have a deep empathy for our consumer and their lived experience in a way that.

Those who came before us maybe were too indoctrinated in the way things have always been done and not have personally confronted some of the problems that we're aiming to solve that loop.

Nice perfect answer. And now, let's actually go to the major topic of the entire podcast, which is the fund raising your fundraising process is definitely impressive. So you started a loop only 6 months ago and you already raised 3.3M dollars and that's 100% not the standard key.

So, can you tell us a little more about that process? How did that happen?

Yeah, and I never want to call it an overnight success, because that is never the truth. And if any entrepreneur tells you that they're full of s***. So I would say the.

Idea for loop really started about 5 years ago and we, as I, as a founder started a company called before my 1st business, it was a B2 B data company.

So we were actually selling insights about road safety to city government. Say, Chicago, L. A. D. C. we were all over the United States helping city.

Governments actually prioritize their traffic safety initiatives so they were spending public dollars efficiently to reduce crashes and save lives that helped us build a core technology that gave us a hard edge.

When going to investors, we were able to demonstrate mathematically quantitatively. We're right. This works,

and we were able to essentially situate our superior technology and the importance of evolving an industry that hasn't really evolved for 25 years as an opportunity to apply data to apply and to

apply it in an ethical way.

That would resonate in today's modern market. So, when the George Floyd events happened, that was actually a big.

Moment, especially for my Co, founder who is a person of color, Dominican, American male to say.

We can't rely on the Bill Gates of the world, or the Elon musk's of the world, or even the bronze of the world and these celebrity sort of folks who are saying who are stepping up and saying, like, there is.

Institutional racism, and it is institutionalized by the systems like financial services, real estate banking, and most certainly insurance.

And so, that was really a compelling factor that then helped us take what was a B2 B, technology and resurface it reposition the entire technology to go direct to consumers. We wanted to lead that change.

We wanted to be at the helm of saying we're going to take on this problem because we're the right people to do it. We can't wait for others. And so.

When we set out to raise money who was probably.

August, we gave ourselves, you know, the reasonable expectations is going to take a couple months and it was a hard fought slug.

As a founder myself, this was my 1st time raising money from venture capital from institutional investors.

John Henry has experience raising venture capital.

Previously he worked at, or was a part of the founding team of Harlem capital, which is a venture capital firm itself, raised a 40M dollar fund with institutional investors from, and TPG and others.

So he had a lot of.
Experience about what this process would be like, even then it was hard it. What I don't know how to describe how hard it was other than to say that,

like,

we started off with a very clear understanding of what we were setting out to do and finding the right partners for us having enough conversations to be able to say and to be a little bit selective in our process.

This is a good investor for us, they believe in our mission. That's why backstage capital.

For example, Arlen Hamilton is on our cap table because she understands that you need to invest and people of color to begin to put capital into changing some of the systemic bias we wanted.

insuretech investors is like a pricing is on our cap table.

And concrete rows, and those that are interested in financial services, where they see a significant, really big market opportunity insurance is a big segment. Right?

And if you understand what you're doing in the segment, you realize how archaic it is. And how.

Right for innovation right? For disruption. It actually is you wanted some Intertek investors that had that experience and then we found a great lead investor in freestyle capital, which is.

Important to me from day 1, we sort of sinked on culture and I think that that gets us the most excited that the biggest checking around really came from somebody that we sinked with.

Personally, the founder Dave Samuel is MIT alum wild. Kind of. If you follow his,
he's,
he's very engaged on Instagram,

posting funny videos and out adventuring in the world,

who is the former of burning man and others that just sort of understood the importance of hacking the rules people who were like,

looking strategically for people that could re,

imagine the rules and reset society in a way,

because they're looking to make very big bets.

We were raising a 3 as you mentioned 3 and a quarter 1M dollars and our seed round. We needed investors who saw.

This is a very big opportunity and we're as ambitious and as mission aligned as we were and jumping on behind us, or to push us and raise us up. So I think it was a long process. We spoke to over 80 investors.

We over a 4 month, period. Ahead it's ups highs and lows. It had its term sheets come and go.

But I think at the end of the day, what ultimately helped us close around was finding investors that really believed in us sinked with us as people. And not necessarily, because we're credentialed, and we have experienced raising capital.

We have MIT degrees, but because they saw the opportunity as 1 that was a problem that was really

worthy of being solved. And that's all you can really ask for as a companies to find an investor that.

Right and that's very cool. Personally love that stage capital. And by the way for those who don't know, they just raised I believe, like over a 1M dollars on Republic.

Which was, I think the very 1st crowd funded fund fundraiser in the entire history VC. So Arlene is just doing some crazy, very innovative stuff there, so yes, definitely. Follow their follow them.

They do create a lot of cool stuff and they do have some ideas. So congrats. 1st Hong bringing them on your cap table. That's just.

Huge deal and good luck. They're, they're great partners. Um, I agree. And I hope great things are coming to Arlen because.

She's right it's just gonna take a while for it to bake. So we actually think about being great, you know, we try to.

Of course, you're trying to return capital to your investors, but for Ireland and backstage capital specifically, we want to be a gold star in her portfolio. We want to be a company that she can say, like, she invested in us early.

She was 1 of the 1st checks in she was the 1 of the checks with the most conviction early on and part of what inspires us is actually making Ireland proud and actually celebrating what she's doing,

which is really important valuable and going to really be successful.
Overtime, I think great things and big things are coming to backstage capital. They already.

They absolutely are. And yes, I think so too. So that's just a great bond there between the investor and the portfolio companies. That's how all of those bonds should work but we spend too much time talking about backstage devil.

Let's move on and see how you found others so you mentioned, you know, that's of course, fundraising is a numbers game, but you were also choosing some specific investors that you felt are good for you. So, how will you find those people? How, how do you track them?

Was it mainly on CrunchBase that you saw their names, or was it on Twitter that you saw their posts and felt like they might resonate with your idea, or how you find those? Yeah.

So, I think social media is an important means of accessing people. It really does democratize access. You can reach out on social media and DM an investor, and they're very active in that sphere.

You can also build your own personal persona much in the way and John Henry has done. He has a very significant following.

I have a very significant LinkedIn following, just given our domains, but I think that the most important thing that we did was.

Develop a network of people around us that are entrepreneurs as well that are on this journey.

So, folks like song long who just raise the series B for his business just a couple steps ahead of us in the fundraising journey.

That could make that pass backwards being a female founder,

being a person of color founder that network is there to support 1 another because we know that the doors just cracked slightly open and the more people we can get inside of the castle,

the more power we will control,
and the more of the world we will design in our vision.

And so I think that actually the biggest piece of advice I can give to other founders that, at some point, envision raising capital in the future is finding other of other companies befriending them.

Authentically learning from them asking for help asking for advice. Another Craig Lewis of is another who ultimately ended up introducing us to Freestyle Capital, which was our, our lead investor.

So, it actually is, I think the people who are on the ground who are also of other companies that are some of the most successful facilitative introductions you can possibly gain.

And I think as a.
Effort for myself, going into Series a coming up soon.

We're already thinking ahead already starting to line up conversations with investors and so the next stage it's finding other CEOs that have been through that process already and really building a network of support because

it only becomes a narrower and narrower sort of needle.
You're trying to thread and a small group of people who have been through it that can.

Both sniff out of your bullshit, right? Because there's some bullshit that I think every founder gets away with that. Vc is maybe don't see, but also, who can say, like.

That's gold that's that's gold and see it when they see it authentically want to refer you, because they want you to be successful.

They want other people in their ecosystem and environment to come up with them. I always say.

1 of my personal goals, and I share this with my team who are big formula 1 fans that I want to be adjacent at Monica. However, you get there. However, I get there.

We're both going to be independently successful in our lives and help each other, get to a place where we can be sipping champagne on the back of a yacht watching formula 1 race go by and just cheers to you in that moment.

I envision that as my destination, so it's really just building that ecosystem of people around you that you want to be adjacent with.

They're just adjacent at Monica. That's currently and they can expedite after that all the goal. 1 day.

That's absolutely wonderful. So, speaking of finding these kind of people, and also you mentioned in the beginning of the episode, the underground network of female tech founders, I even wrote down that quote, because I loved it as well. So, where do you find those people? Is it some slack groups?

Is it again to where some LinkedIn group some WhatsApp groups I know where you find people.

Uh, well, insurance, I can share specifically that you go to a tech conference, and there's like 5 of you and you can see each other across the room because you're 1 of the only people, not wearing khaki pants, a white shirt and a blue jacket.

The reality is, is that insurance in general is 1 of the widest industries out there, and it is 1 of.

Mail heavy industry is out there.

I literally had an advisor,

she's an innovation officer within 1 of the major insurance companies,

based out of Hartford and she,

the 1st time I met her was wearing a hot pink blazer,

and I was wearing a zebra print or something like that.

We saw each other from across the room and that's how we made friends. It's literally such a small community that we stick out, like, store thumbs. It's hard not to find us.

And I'll say that once you do network into a few people, for example, Kate. Terry of surround insurance is somebody I reach out to on the low all the time to ask questions.

Just get her perspective. She just raised her series A, she's launching a very similar business insurance business, bundles, home and other coverages. She's able to sort of.

Tell me what's up, because she's been in those rooms before and share it back. And then we found out that we were connected to another woman, Gloria, who just launched a commercial auto product and we didn't even know, we knew each other.

But the world is just so small that we find each other through just being the only ones in the room. And I think that that's a really.

You know,
if you're going to a network event,
and you're the only woman in the room,

or you're 1 of a few people that look like you actually developing a small coalition of people that understand that experience and are just rooting for each other is a really powerful way to build relationships.

You have a commonality between you from the jump. Like, if you need a tamp on an insurance conference, I got you, but I'm probably 1 of 5 people in the room that can help. Right?

So, it's kind of like that the community is so small that you just can't not find each other in insurance. Another is Kristy. Horrible right?

I can almost name all of them that I know, but I would also encourage those that are coming up to reach out.

Male or female of a good friend Dirk, who founded a company called parental paid parental leave insurance another really.

A helpful product for women in particular though,

it was founded by a man is is designed with the vision of parents who are taking off from work and employers buying an insurance product to essentially account for those situations where an employee has to

leave to care for their child and so.

It's such a small community of people that it's hard not to find each other. And if there are others that are coming up, like.

Just the US we'll loop you into the circle. It's, it's a small, but loyal group that help each other out.

This is really cool and at the same time, it's kind of said that he can just find each other in the room, but 1 quick follow up question on this. Right now. Everything is online. So there are no physical rooms. How can people find like, minded people now?

When everything's in line? Yeah, I love podcast.

I'm a big fan of going on podcasts just ironic, because I didn't even just realize on a podcast, but sending your message out into the world and creating a platform and sort of a sphere.

A sphere that other people can be brought into right? Putting your position out there. I'm a person that cares deeply about ethical. I develop content. I share content about ethical about how we can restructure the future.

If we know the rules. We can redesign them in our vision. We shouldn't just let algorithms, decide for us because all algorithms are built by humans. We need to be back at the beginning and design.

How these algorithms should form how they should run and what consequence they have on real people, and specifically people who have been treated negatively by by those same algorithms previously. So, I put out a lot of content around that.

And now I find a community of people that are magnetically drawn to me, because they want to participate in that dialogue. And so I think you can't just wait to find.

A LinkedIn group or a chat room like clubhouse is cool,

but if you really want to build relationships with people,

you have to give them something to link onto something that they're interested in you and what,

you know,

and what you care about to engage with you.

So, I think just developing content, creating a voice for yourself projecting out into the world. Others will respond.

Perfect and very optimistic on this optimistic note. We are moving on to a last question of today's episodes and the question is the call to action. So Carrie, what do you want her to do? As soon as the episode is over? Yeah, I want you.

And this is so awful. Well, 2 things 1, I want you to go loop ensure dot com I want you to sign up for our, particularly if you're in the state of Texas because right now we're doing a lot of user research understanding what people want.

What people need in our go to market state where they're at, what kind of consumer really resonates with the product. That's built to be more. Inclusive doesn't include. Credit doesn't include education doesn't include income.

It's also 1 of the 1st companies to not give a s*** about what gender you are, whether you want to specify your gender at all it is super modern and Super. Cool. So, I want people to sign up so that we can get to know you a little bit better.

And then the 2nd thing more philosophically, I think I would leave a listener with is to actually self, assess our lives and ask.

The same questions that Jeff Bezos wrote in his retirement letter. This is day 1, this is day 1 of a new journey. What will that journey be for you? What are you starting to build today?

What rules put that in quote? Do you live by that? You don't want to live by anymore what kind of product could you create if you weren't hamstrung by the way things have always been done and that sort of creative energy?

We've all got a little bit of downtime during coven. It's cold outside. It's snowing. We're all stuck inside. I'm running out of books to read. Amazon can't deliver them fast enough.

I think it's a really great time an opportunity to find opportunity in crisis and ask ourselves. How are we going to come out of this as different people? That are ready to take on.

Some of the very big challenges are country faces following the pandemic. And so it's something that needed to do during this pandemic of inspired me to launch Luke and I hope I can share some of that inspiration.

Encourage others to go through that same self assessment and journey as I did, because lips Austin loops, a car insurance product that you're going to be able to.

It's going to change the entire industry of car insurance, but there's so much more work to be done based on other people's expertise and other people's lens of the world.

And I just want that like, as I mentioned before that castle that we kind of snuck into. We're inside, we're looking around right now, because we just raised our seed rounds, but I want more people to come in behind me. Even if we need to Trojan horse them into the building.

We gotta get to work nice. I love that call to action and I'll make sure to leave all the links mentioned in the episode specifically link to the loop and link to carries LinkedIn.

And also to Twitter if you have 1, which I'm pretty sure you do.

Yes, and to Twitter as well and maybe to something else I'll have to see that, but yeah, Mike also should be using the fall carries call to action and also check out the description of this episode. I'll leave all the links there.

So, check them out and it's usually have a gate.