Israeli Next Insurance pulls $13M seed to challenge U.S. small business insurance market
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Next Insurance Co-Founders (from left to right) Nissim Tapiro, Guy Goldstein, and Alon Huri. Photo credit: PR

Next Insurance Co-Founders (from left to right) Nissim Tapiro, Guy Goldstein, and Alon Huri. Photo credit: PR

There is apparently something about the American insurance market that is lighting a fire under the Israeli VC community

In a surprise announcement on Tuesday, Next Insurance declared that they had succeeded in raising an impressive $13 million seed round to take on the small business insurance market in the United States. Backing them are TLV Partners led by Rona Segev and Eitan Bek, Zeev Ventures, and the Fintech-focused Ribbit Capital.

The company was co-founded by CEO Guy Goldstein, Nissim Tapiro, and Alon Huri. Before launching this latest venture, the trio led the mobile payments company Check through to its $400 million acquisition by Intuit in 2014.

The issue that the company is attempting to tackle is the pain of buying insurance for small businesses. According to their research, they say that there are 28 million small businesses in the U.S., with another half million opening every year, making for an ample target market.

The team has identified that whereas most of the other services that a company is able to normally purchase online, including the growing area of lending such as was seen with this week’s raising of £20 million by UK small business lender EZBob Ltd, insurance is still being bought in analogue.

Goldstein said in his statement to the press that, “We are changing the market with a solution that makes it simple, fast, and transparent for small businesses to find and obtain insurance online vs. having to physically visit agents each time they need to make a change.”

At first glance, it appears that Next will work as a platform where users can compare offers and find the package that best fits their needs.

What do Israeli tech entrepreneurs know about American insurance markets that we don’t?

There is apparently something about these new takes on the American insurance market that is lighting a fire under the Israeli VC community and hard to explain. With the exception of two companies over the past three years that raised extremely large seed rounds — media-focused WhipClip raised $16 million and Sirin’s $25 million to make luxury mobile phones at $10,000 a pop — no other industry has been able to inspire investors to pull out their wallets quite like insurance.

It has barely been three months since P2P insurance company Lemonade raised $13 million in December from Sequoia Capital and Aleph Venture Capital without revealing much about their product other than the fact that they will eventually have one.

This $13 million figure seems to have set a new standard to be taken seriously in this budding industry that has set its sights on the U.S. insurance game. Granted, these two new ventures seem to be tackling different aspects of the business, with the mysterious Lemonade aiming to introduce the P2P perspective while Next is going after the more specific small business sector.

Insurance in the U.S. alone is said to be a $1 trillion business, according to Next, with $1 billion of that comprised by the small business segment. Some excitement at opportunities to make a play for some of that action is understandable.

However what is difficult to grasp without having seen their business plans is how they can justify $13 million as seed funding round. Maybe it is aimed at getting attention and is necessary to be taken seriously here. It is not like Next or Lemonade will need the capital as the insurers, since they are likely to be merely the facilitators. Is this leading to the problem of overstating evaluations or is this justified? Only the companies and time will tell.

The only reasonable explanation for these high rounds comes back to the teams. Next’s founders have proven that they know how to lead a company and have inspired confidence with investors. TLV Partners’ Bek was a lead investor in Check and appears to have full confidence in the Next team to produce great things.

Beyond the B2B aspect of their accomplishments with Check, Bek says of the team that, “They were also able to create a consumer brand and to build trust with customers in Financial services. Both are not easily done and are a big advantage when addressing the Insurance Market. I’ve also worked with them for several years in “Check” and learned to appreciate their unique talent and execution capabilities.”

The same story is true with the Lemonade crew, with investors citing the value of a strong leadership that can guide a company to greatness as being among the factors that brought them to become backers.

It is difficult at this stage to determine how these companies will fare in breaking into the U.S. market and the jury is still out on the online lending front. While still very exciting for investors and the tech community, the public has been less receptive. Companies like Lending Club have seen their stock fall significantly over the past year, down to $8.53 from the ~$20.00 from a year ago.

The American insurance system is contorted and generally despised, so any attempt to disrupt it is probably a move in the right direction. That said, when it comes to sensitive issues like insurance, a service that people depend on should the need arise, these startups had better tread carefully if they hope to get their foot in the door.

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Gabriel Avner

About Gabriel Avner


Gabriel has an unhealthy obsession with new messaging apps, social media and pretty much anything coming out of Apple. An experienced security and conflict consultant, he has written for The Diplomatic Club, the Marine War College, and covers military affairs with TLV1 radio. He mostly enjoys reading articles wherever his ADD leads him to and training Brazilian Jiu Jitsu. EEED 44D4 B8F4 24BE F77E 2DEA 0243 CBD1 3F7C F4B6

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