When Itai Ben-Zaken's first startup failed in 2018, the former BCG consultant and Wharton MBA did a lot to understand what could have been done differently in the five years he ran the company. It took me months.
After analyzing most of his major decisions, I found that while Comprendi, a digital ad recommendation business, is an interesting offering, its biggest mistake was trying to operate in a market with two dominant players: Google and Facebook. I concluded that there is.
So when Ben-Zaken started looking to form a second startup, he vowed not to make the same mistake again. He considered starting a business in a market divided by many competitors, and eventually settled on starting a company that would provide property and casualty insurance to landlords and condominium associations.
Travelers, the largest homeowners insurance company, accounts for only about 7% of the market, with the rest of the competitive landscape spread among 100 smaller providers, Ben Zaken told TechCrunch.
Ben-Zaken was no stranger to insurance. Prior to launching Comprendi, he spent four years running Insurance.com at QuinStreet, a white-label financial services marketplace operator.
He launched Honeycomb Insurance in 2019, and after spending two years building the company's computer vision and AI-powered real estate “inspection” technology, the company sold its first policy in 2021. Ben-Zaken said Honeycomb's AI relies on aerial images of building roofs. In many cases, expensive physical inspections are no longer necessary.
The company raised $15 million in Series A in early 2022 and is currently on track to sell $130 million in premiums in 2024, triple the amount from last year.
When Honeycomb was preparing to raise Series B funding earlier this year, one of the first calls Ben-Zaken made was with the venture, known as Navan, Houzz, Next Insurance, and one of Tipalti's major shareholders. It was a solo call to capitalist Oren Zeev.
“I was shocked by what I saw,” Zeev said of the honeycomb. He agreed to back Honeycomb, but only if Benzaken agreed not to pitch the deal to other investors.
Ben-Zaken did not hesitate to accept Zeev's proposal. From the time he founded the company, he dreamed of having this solo VC as his backer and on his Honeycomb board of directors.
Mr. Zeev wrote Honeycomb a check for $30 million and became the company's largest shareholder. Other participants in the $36 million Series B that the Chicago-based startup announced Tuesday include new investors Arkin Holdings and Launchbay Capital, and returning backers Ibex Investors and Phoenix Insurance. , includes IT-Farm.
Mr. Zeev is also not an expert in the insurtech field. He owns a large stake in Next Insurance and was a backer of Hippo Insurance before it went public through a SPAC in 2021. But he's not a “fan” of insurtech in general, he said. Sector.
“I wasn't considering any new investments in insurance,” he told TechCrunch. “The bar is very high because I am aware of the challenges.”
In addition to the company's rapid growth, what attracted Zeev to Honeycomb was the idea that homeowners insurance is a “sleeping” industry that's ready for innovation, yet at the same time large enough for insurance giants to want to tackle it. The problem is that this field is not big. In other words, Zeev isn't worried about major companies encroaching on his Honeycomb space, as he did with Ben-Zaken's first startup.
The landlord and condominium association insurance market continues to be highly fragmented, Ben-Zaken said. According to him, there are two startups in this field. One is Steadily, which raised $28.5 million in Series B funding last July, and Obie, which raised $25.5 million in Series B funding from Battery Ventures a year ago.
Honeycomb plans to use the new funding to double its headcount from 90 to 180 people over the next 18 months, introduce new products and expand its services to new markets.
“We're going beyond homeowners insurance,” Ben Zaken said, adding that his company's goal is to become a one-stop shop for commercial property insurance.