Strava co-founder rushes into lucrative deal – loan vs. life insurance • TechCrunch
Mark Shaw likes to run.
The serial entrepreneur joined activity and fitness tracking platform Strava as a co-founder in 2009 to lead engineering as CTO. He spent eight years there, and by its last surge in 2020, Strava had reached 70 million members worldwide and garnered an almost cult-like following from its users, which include professional runners looking to track their progress.
Prior to that, Shaw helped launch insurance software company Guidewire. Again, he helped the company grow to a different level with his engineering, analytics and marketing chops before it went public in 2012.
After a short break between those two periods, Shaw partnered with Josh Wyss and Graham Gerlach in 2020 to launch his third venture: Inclined. The fintech startup is growing in its own right, though it has yet to attract tens of millions of users or go public. And it just raised $15 million in Series A funding to continue growing and developing its technology.
Inclined, admits Shaw, is a very different kind of business from Strava. Startup Lends Against Whole Life Insurance Policies, Aiming to Digitize »many of the traditional time-intensive operations” involved in the process, he said.
“There’s a trillion dollars worth of cash in all of life in the United States alone,” Wyss told TechCrunch. “We want to look at this huge opportunity.”
The current lending market today against that $1.1 trillion is $150 billion, and that’s Inclined’s original goal.
“We believe we can increase that lending rate with our improved rates and efficiency,” Shaw said.
Hudson Structured Ventures led Inclined’s Series A funding, which included participation from Anthemis Group and other new and existing backers. The startup has raised a total of $19 million since its inception in 2020.
The startup’s Series A was raised in what Shaw described as “the most brutal fundraising environment” he has seen in the past two decades.
“Ours is a countercyclical business and a very safe form of lending,” he told TechCrunch. “It’s a time when people need to have access to these loans. It’s a good time for us to grow – we can make a big impact in these unfortunate and more difficult times.
Whole life policies differ from term life policies in that they accumulate permanently available value, rather than simply paying for coverage. Shaw compares this to buying rather than renting a home.
And when whole life policyholders want to access their cash value, they often choose to do so via a loan, rather than withdrawing the money directly, which is less efficient, he explains.
Tilted, he adds, not only opens the possibility of borrowing against whole life insurance policies to more people – something that has always been reserved for the wealthy – but also gives banks a better way to participate in the large-scale market. And because banks often have “much lower rates than insurance companies,” Shaw explained, that means borrowers can borrow at lower interest rates. Plus, their money can be compounded over decades.
“That means they can get five to 10 times more value from their life insurance over their lifetime,” Shaw told TechCrunch.
Inclined is direct with Mechanics Bank, which manages approximately $20 billion in assets. And it currently has several million dollars on its platform.
Vikas Singhal, founding partner at HSCM Ventures, believes that Inclined engages four “separate but important components” in a single digital financial transaction: insurance companies, agents/brokers, lenders/banks, and policyholders.
“The financial transaction provides immediate value to the end customer – an insured who has already borrowed reduces their cost of borrowing – but also provides highly aligned and equally important value to all other constituents,” Singhal wrote via email. . “This is financial democracy at its finest. Although the refinancing of existing policy loans has been in the works for some time, it has not always been accessible to everyone, and a digital turnkey solution allows everyone to benefit. »
His company also sees Inclined’s offer as just a starting point.
“The cash value inside permanent life insurance products is an underutilized asset and we believe this entire market can benefit from banking products that are built on this foundation,” Singhal added.
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