Funding is an issue for every startup looking to compete in an established market. For insurtechs, it’s a vital piece of getting noticed by insurers as well as securing the financials that can power real growth and development.
At the recent InsiderTech event in June, an investor panel with representatives from Altamont Capital, American Family Ventures, Assurant Growth Capital, and XL Innovate highlighted some of the factors they evaluate when deciding whether or not to invest in an insurtech. One of these factors is the team.
When the issue of the team behind an insurtech was introduced, all four investors echoed its importance, largely agreeing that the best idea can fall flat and fail without a strong unit behind it.
We’re going to expand on the idea of the team, and dig into why it can make or break an insurtech before it even reaches the investment stage.
What Makes a Good Team and Why Does it Matter
There are many factors that go into creating a successful startup, starting with an original and fully developed idea and business plan. When 9 out of every 10 businesses fail within their first five years, creating a strong foundation can’t be overstated, especially when a recent study found that 60 percent of those startups that fail do so because of the team.
Building a strong team requires some degree of luck, but three things are crucial: hard skills, soft skills, and collective collaboration.
Hard skills can mean a lot of things. When it comes to the insurance industry, a depth of industry knowledge is a valuable asset. Many traditional insurers have been doing things their way, successfully, for decades. Experience working in the industry and fully understanding how to navigate its politics, processes, and intricacies can give a new company an edge when its comes to establishing partnerships and bringing its solutions to bear in the broader market.
Hard skills can also refer to prior experience working with a startup, as an entrepreneur, or as a business developer. Knowing how to approach investors, flesh out a business plan, and clearly articulate your value proposition can make or break an investor meeting, or even securing that meeting in the first place. A great idea is nothing without the means to bring it to market and demonstrate its value. As someone once said, “most great ideas are said over drinks and never done.”
The final hard skill that’s vital to the success of an insurtech startup is technical ability. This should go without saying, that without a team member(s) who can develop, manage, and scale your technology solution, the startup is dead in the water.
Soft skills are the ones that may seem optional, but they are arguably just as important as industry expertise and tech savvy. Working as a startup means pushing through times of insecurity, doubt, anxiety, and frustration. It also means knowing how to negotiate, pitch, and communicate your vision in a way that sets you apart from the other 9 out of 10 startups that will fail. What makes your company strong, unique, and developed enough to go the distance when so many others with an equally good idea will fail? This is where the importance of soft skills truly makes a difference.
Collective collaboration is where the team comes in, and the importance of this is never more important than in the early stages of a startup. This was brought up by Martha Notaras from XL Innovate at InsiderTech’s investor panel, who said that the younger the company, the more important team cohesion and compatibility are.
Shared vision, drive, ingenuity, and ability to compromise can create a motivated team that, when combined with the right combination of hard and soft skills, can transform an idea into a truly innovative industry solution. Once this team is assembled, it’s also vital to be able to communicate this to investors.
The Importance of Team to Investors
“Team is the most important thing when it’s a new company, including how they treat each other and interact.” - Martha Notaras from XL Innovate
Don’t underestimate the significance of how your new team presents itself to potential partners and investors. The most brilliant idea can fall apart if the wrong group of people are behind it, and investors are well aware of that. Another reason team is so important early on is because the initial team sets the stage for how the company culture will develop as the startup flexes its muscles and begins to scale.
Lack of respect, inability to communicate on issues, and inflexibility clearly communicate to potential investors and partners that your sexy idea is unlikely to get off the ground.
So, what are some of the key qualities investors are looking for in an insurtech they’re considering for an investment? Here are a few of the characteristics that came to light during the investor panel at InsiderTech.
- Ability to “clearly articulate command of knowledge and market.”
- Knowing who is going to pay you and why, which should always lead back to the customer.
- Being focused on your particular solution and not trying to “do too much.” This is an easy trap many startups fall into, which hinders their ability to bring a truly exceptional product to market.
- Clear communication and understanding of individual roles within the growing company.
- A clear business plan and the flexibility for that plan to grow and adjust through constant assessment.
The drive to be entrepreneurial, bring an idea into fruition to solve industry problems, and engineer an innovative solution through the entire development process are behind every great insurtech. In a market that’s becoming increasingly saturated, and traditional insurers are becoming increasingly picky about which insurtechs they partner with, the team behind the startup is vital. Ten companies pitching the same idea to a group of investors can set themselves apart with a strong team that can clearly communicate and share a fierce drive to succeed in the insurtech market.
Cultivating a culture that lasts
Once you’ve built a good team that resonates with your company, product, and industry, it’s never too early to begin building company culture. While it may seem easy to overlook, company culture is incredibly important when it comes to sustaining the long-term success of your team. It sets the tone for how team members interact, communicate, and delegate, ensuring that when you bring new people in you know they will be a good fit.
At Montoux, we’ve invested significant time and energy into building a company culture because we believe it’s vital for ensuring a high-functioning and happy team. Our brilliant COO Toni Moyes recently wrote about building, developing, and maintaining company culture - check it out!