Lula, a Miami-based insurance infrastructure startup, announced today that it has raised $ 18 million in a Series A funding round.
Founders Fund and Khosla Ventures co-chaired the round, which also included SoftBank, hedge fund manager Bill Ackman, Shrug Capital, Steve Pagliuca (co-chair of Bain Capital and owner of Boston Celtics) and Andrew Wilkinson of Tiny Capital. Existing donors such as Nextview Ventures and Florida Funders invested, as did a number of insurance and logistics groups such as Flexport.
The self-proclaimed mission of the startup is to provide companies of all sizes – from startups to multinational corporations – with insurance infrastructure. Think of it as a “Stripe for Insurance,” say its founders.
Founded by the 25-year-old twin brothers and Miami-born Michael and Matthew Vega-Sanz, Lula actually emerged from another business the couple started while in college.
“We couldn’t afford a car on campus and we wanted pizza one evening,” recalls Michael. “So I thought it would be cool if there was an app that I could use to rent a car from another student and then I was like, ‘Why don’t we build it?’ We then created the ugliest app you’ve ever seen, but it allowed us to rent cars from other people on campus. ”It was the first company to allow 18-year-olds to rent cars without restrictions, so that Companies.
By September 2018, they officially launched the app outside of the Babson College campus, which they attended with scholarships. Within eight days of launch, the brothers said the app became one of the top apps on Apple’s App Store. The couple dropped out of college and within 12 months had cars available on more than 500 college campuses across the United States.
“As you can imagine, we had to make sure that every rental was covered by insurance. We presented it to 47 insurance companies and they all turned us down, ”said Michael. “That’s why we developed our own underwriting methods or tools for operations and had the lowest incident rate in the industry.”
As the company grew, it began working with car rental companies (think smaller companies, not Enterprise, etc.) to complement its vehicle offering. In doing so, the brothers soon realized that the most compelling aspect of their offering was the insurance infrastructure built into it.
“Our car rental companies are starting to do a significant part of their business through our platform and one day someone called us and asked if they could use the software in the insurance infrastructure that we had built for the rest of our business.”
That was in early 2020, shortly before the outbreak of the COVID-19 pandemic.
“That was when we realized, ‘Hey, maybe the big opportunity here isn’t a college student car sharing app, but maybe the big opportunity here is something with insurance,'” Michael said.
A few weeks later, the duo closed their core business and in April 2020 they started building Lula as it exists today.
“Just as Stripe created a payments API that made it unnecessary for companies to build their own payment infrastructure, we decided to create an insurance API that eliminated the need for companies to build their own insurance infrastructure,” said Matthew. “Companies no longer have to set up internal insurance systems or instruments. You would no longer have to deal with insurance brokers to get them cover. You would no longer have to deal with insurance teams. We can integrate ourselves on one platform and use our API to handle all insurance questions for companies and their customers. “
By August 2020, the company had launched a Minimum Viable Product (MVP) and has since grown by around 30% month on month after hitting profitability in the first four months.
Credit: Lula
Today, through its insurance partners, Lula offers a “fully integrated suite” of technology-based tools such as customer screening, fraud detection, driver history checking, and policy management and claims processing. It has a waiting list of nearly 2,000 companies and has increased its funding to meet that demand.
“The main purpose of raising capital was to build the team needed to meet demand and drive growth,” said Matthew. “Aside from that, we also just want to keep developing the technology – be it in the way we collect data to make more accurate decisions and make smarter decisions, or just to optimize our review system. We’re also just working on developing a much more robust API. “
Existing customers include ReadyDrive, a car sharing program for the US military, and a “ton of SMEs,” the brothers say. Investor Flexport will conduct a pilot project with the company.
“Every time a trucker picks up a load or delivery, he can only pay for the insurance for the two to three days that he is on the road instead of monthly policies,” says Michael. “In addition, someone who ships a container via Flexport can add cargo cover at the point of sale and receive an additional layer of protection.”
Ultimately, Lula’s goal is to act as a carrier in some way.
Founders Fund’s Delian Asparouhov believes the way Millennials and Gen Zers use physical assets is “very different” than previous generations.
“We grew up in a shared economy world where apps like Uber, GetAround and Airbnb allowed us to phased out assets instead of buying them outright,” he said.
In his view, however, the insurance industry has not taken up the massive shift.
“Typical insurance brokers don’t know how to guarantee episodic use of assets, and they don’t know how to integrate with these typical digital rental platforms and enable instant underwriting,” Asparouhov told TechCrunch. “Lulu combines these two technologies into an incredibly unique approach that digitizes insurance and gives us retrospectives of how Stripe revolutionized the digitalization of payments.”
Despite their recent success, the brothers emphasize that getting there wasn’t always glamorous. You were born to Puerto Rican and Cuban parents and grew up on a small farm in South Florida.
“We started our business out of our dormitory and initially emailed 532 investors just to get a response,” said Michael. “Founders only see the headlines, but I’d just like to advise them to be persistent and really stick with it. I’m not afraid to share that the company started slowly. “
source https://collegeeducationnewsllc.com/miami-twins-raise-18m-for-lula-an-insurance-infrastructure-upstart-techcrunch/
No comments:
Post a Comment