Why would an insurtech startup choose crowdfunding?

Oct 17, 2017
Women holding a mug

We’re crowdfunding! This is an unusual choice for an insurtech company (as in, it might actually be a world first) - and it’s easy to see why.

Crowdfunding is a big deal for a startup. A very big and very public deal. If you pitch to a venture capitalist or an institutional investor and they turn you down, it’s a reasonably private process. If you pitch to the world and the crowd turns you down… well, there is a chance that might have a slight impact on your reputation. Just a smidge.

Entering an equity crowdfunding round before finishing the first version of a product is a big decision for any early stage startup to take. Throw in the fact that most people don't actually like insurance and our big decision starts to look rather bold. 

A man in swimming shorts jumps off a cliff into the ocean.
And it feels something like this. | image: Austin Neill

So why crowdfund? Couldn’t you raise enough money from traditional investors?

We’ve actually had our best months ever for raising money and support for Wrisk. When investors see our product and hear about our partners and plans, they tend to be enthusiastic. Our decision to crowdfund is less about the funding, more about the crowd.

We’re creating a product for many people to buy and use, but only insurance executives or other financial tech entrepreneurs are likely to have heard of us. We’re a few months away from our planned launch; it’s the perfect time to get our brand out and start meeting people likely to actually use our app in their day-to-day. We want to speak to our future customers, and we want to give our future customers a way to speak with us. 

A man surrounded by bulky technical equipment in a dark room turns towards us, wearing a virtual reality headset.
Actual human interaction is on the roadmap, we promise. | image: Eddie Kopp

From inside a startup, crowdfunding makes you feel more vulnerable. Suddenly, our product details are no longer tightly under wraps; they’re detailed in 1000-character essays and featured in a video. Our business plan and pitch deck will be available on request. Anyone signed up to the crowdfunding platform can ask probing questions about anything they like, and we have to give clear and comprehensive answers to all.

Fortunately, this process is 100% aligned with Wrisk’s values: simple, personal and, most importantly, transparent. One of our goals is to break open the ‘black box’ of the insurance industry. Our app surfaces information insurers don’t tend to share, giving customers a way to make more informed decisions and more easily buy the insurance they need. It makes sense to start by offering up information about ourselves.

Besides, crowdfunding just feels like a natural fit for a company in insurance. Insurance is about spreading risk amongst the many so that no one person is left over-exposed. Crowdfunding does the same for investment, offering individuals the chance to own parts of companies like Wrisk for smaller amounts than traditional investment avenues allow.

A large crowd of people cross a busy street on a rainy day, almost all of them holding umbrellas.
A crowd of people holding umbrellas, the traditional symbol of insurance. It was too appropriate not to use. | image: Alex Block

Sounds like it was easy for you, then...

Whoa, whoa, whoa. Back up. 

If you only take one thing away from this post, let it be: crowdfunding is never easy. On the contrary, crowdfunding is very demanding. It creates an extra layer of work across the entire organisation, which takes time away from building the product - counterintuitive for tech entrepreneurs!

However, a startup is more than just its products. Deciding to go ahead with a crowdfunding campaign meant we had to put some serious time and thought into our packaging.

Sure, we had a logo. A single colour. A business plan, written months before. A pitch deck. But when those materials were used, they were generally accompanied by the charisma and passion of our founders demoing the app in person. Any crowdfunding platform strips those advantages away.

Every element of our campaign had to be able to represent Wrisk on its own, while also being consistent when viewed alongside every other element. On the plus side: hurray for copy-paste! On the minus side: this meant both founders, the internal team and wider stakeholders now had to agree on official Wrisk messaging. Gulp.

A group of people bump fists together in a show of team solidarity.
This... isn't exactly how it went down. | image: rawpixel.com

Like many startups, we hadn’t yet sat down and decided on the language of our company. So we went through a workshop for everyone connected to marketing, narrowing down our respective - and sometimes contradictory - gut instincts into a workable set of uniform brand guidelines. With these, we were able to overhaul our business plan, pitch deck, two-pager, website, social media bios, campaign draft and crowdfunding video script.

Every aspect of our public face went through multiple drafts, edits and rewrites. Now everyone who has worked on the campaign could probably recite the more frequently recurring chunks of messaging in their sleep! (There’s a chance we already do. “Our Wrisk Score… is like a credit score… for personal risk…” “What was that, darling?” Cue unexpectedly insurance-focused breakfast conversation.)

A woman in bed, just waking up.
"We're giving insurance... a long overdue... digital upgrade..." | image: Kinga Cichewicz

Are you sure crowdfunding is worth the hassle?

Let's face it, all of this work had to be done at some point. As a small team with a lot to do and product launch months away, the temptation was always to push it back to ‘another day’. Now we have a shiny new brand, messaging everyone is happy with and a number of assets - including professional videos - that we can use to promote ourselves even after the campaign ends. That's valuable no matter how the round goes.

That said, we have it on good authority that crowdfunding takes a lot of hard work even if you don't go through a full branding exercise as part of the process. The campaign hasn't even begun yet, but this hard work already feels worthwhile. This time next week, everyone will know what our product can do, who our partners are, how much money we expect to make... and we can’t wait.

Photo by Annie Spratt on Unsplash

Picture of Wrisk employee Sima Patel
Sima Patel

Drives marketing decisions, seeks her way to solutions creatively and loves to cook

Insurance made so simple it’s almost unrecognisable ✨

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