When Coverdash, which provides commercial insurance products to startups, tripled the number of embedded distribution partners to more than 100 in the past year, CEO Ralph Betesh made a decision.
He could either continue on his way to profitability or raise a venture capital round that the private insurance company didn't really need so he could bring in bigger partners faster.
“We encouraged more large partners to continue partnering with us and getting on board with our roadmap,” Betes told TechCrunch. “We talked about adding these partners over time, but we thought we might lose a partner. On the other hand, this is not the most challenging environment for a Series A in the last four years. That's what everyone said.”
Additionally, it wasn't that long ago that Coverdash raised capital. TechCrunch last profiled the company in early 2023, when it raised $2.5 million in seed funding. At the time, the company was just starting up with his 35 sales partners.
Betesh founded the company in 2022 with David Vainer and Avery Rubin. Coverdash offers small businesses, e-commerce merchants, and freelancers the ability to purchase business insurance in areas such as employer's insurance, cyber coverage, and workers' compensation.
Distribution partners such as payroll providers, banks, and vertical SaaS platforms are incorporating Coverdash's insurance tools into their platforms. Businesses can answer a few questions, select an insurance policy, and receive coverage in minutes.
“Our focus was to provide our embedded customers, our direct consumer customers, with options from leading companies in the insurance industry, allowing them to choose what is best for them. ” said Betesh. “This approach also protects us from some of the carrier-specific nuances. For example, if one carrier doesn't take on the risk, we get better pricing and better coverage at that price. We have a number of other options that we can offer a range of, which is very powerful for our end customers, which is our focus.”
Last year, Coverdash added a management responsibility product specifically for startups that have a board of directors or are raising capital. Betesh explained that this entails several requirements, including liability insurance for directors, company officers and other management personnel.
As a result of this new product, some big business has come to Coverdash, including new partners and overall growth. He increased the number of employees by 5x, tripled the number of embedded sales partnerships, and increased the number of customers by 30% month over month. Betesh declined to discuss revenue specifically, other than to say that revenue has increased “sharply” over the past year as a result of partnerships and customer growth.
Ultimately, Betesh and his co-founders chose the venture capital route and raised $13.5 million in Series A funding. New investor Nyca Partners led the round, joining existing investors including Bling Capital, AXIS Digital Ventures, Tokio Marine Future Fund, Expansion VC, and Cameron Ventures.
“We were ready for it,” Betesh said. “Everything fell into place very quickly and we had offers from multiple companies in over two weeks. We've been able to increase that, and we've focused on getting profitable as quickly as possible.”