"The idea is 0.1% of a successful start-up," says Becky Downing, CEO at BuzzGroup, a financial technology (fintech) company that runs a U.K. price comparison website for removal companies. She has since used the data its customers share about their belongings and material wealth to move into the insurance technology (insurtech) field with her latest venture, BuzzVault.
"Most start-ups fall by the wayside because execution is what really matters. How you develop your original idea to expand it into viable markets and a feasible business is what counts," says Downing, a winner of the City of London's Worshipful Company of Information Technologists (WCIT) Emerging Entrepreneur Award last year, the U.K.'s 'tech Oscars', and 2016 nominee for the U.K. Startups Awards (Women in Business Category).
Downing, who shares her tips for what makes a successful start-up, was also shortlisted last year for the U.K. First Woman Awards (Entrepreneur category) and the Great British Entrepreneur Awards (innovation and young business categories).
The BuzzGroup company she founded in London, U.K. was set up in 2013. Its first product, the BuzzMove removals website, allows U.K. consumers and other property owners to create a digital inventory of their belongings and compare prices and book certified removal firms to facilitate a move. The company also provides removal firms with professional video surveying software. The customer data that is stored means insurance companies can now access home contents data and provide cover – if the end user permits their data to be shared.
This latter development of the original idea, using the material wealth data that its customers share to break into the insurtech field, was always envisaged as an application of the future. The removals market is merely a 'trigger point' in this regard. It is a perfect illustration of how a data business and fintech-enabled firm can find new markets and end uses if they know how to leverage customer trust and data and, crucially, if they have a clear long-term plan for the future.
A fintech can effectively become a 'concierge' directing its customers to insurance, or any other financial service if they control the data. However, linking to established insurers or banks, which often have legacy IT systems and data silos that cannot interact with newer formats, messaging standards and more modern IT, can be problematic for any start-up looking to partner with a financial institution (FI). This may be an issue for BuzzGroup in the future as it attempts develop a data-centric 'concierge' business and scale up.
The spin-off BuzzVault insurtech digital inventory and app, which stores and protects belongings on the blockchain, takes a fee from insurers for its services, effectively acting a sales channel. But it offers insurance partners a fresh approach to customer acquisition and retention that they would not otherwise possess. The original BuzzMove 'property tech' imprint operates on the same principle that the user doesn't pay. It is the valuable customer data that will lead to future revenues and insurers, property firms or whoever pay to access the data.
Insurance companies that partner with BuzzVault can provide 'on demand' cover for a single expensive item that a consumer owns, such as a camera, a family heirloom or indeed a household or office's entire belongings. Bespoke or comprehensive insurance options are available to suit each end user need based upon the data submitted. Prices can also be provided on a real-time basis so that coverage goes up or down with the value of the asset.
This dynamic 'on demand' aspect of insurance is growing trend in the insurtech field. Customers can also manage any claims from the BuzzVault app on their mobile phone or online.
"You have to know that you'll come up against a million obstacles as CEO of a start-up," says Downing. "Entrepreneurs are successful because they keep going, develop the idea and overcome them."
BuzzGroup's initial 'property tech' BuzzMove offering for instance got it established, but always with the understanding that the data could be used for insurance purposes at a later date with the BuzzVault launch.
Other offerings may develop in the future on the back of the crucial data that is collected and the on-going development of its community of users. This is the key focus of the business and has allowed it to overcome the obstacles that any start-up faces, such as raising money from investors and interest from clients.
"The challenge once you've had the original idea is how you can then develop it and enter new and different markets in the future," says Downing. "After that, It is a matter of getting through the daily grit and grind of executing your plans and growing a fintech – or indeed any other firm. It's not easy."
Many other start-ups are competing in similar areas with Trov and CBien in France notable examples of 'on demand' technology-enabled insurtech rivals and digital inventory specialists. They will be major competitors for Buzz in the future as they look to spread their wings globally.
The insurtech field is a subset of the wider fintech industry where technology specialists seek to provide services to incumbent firms that do not have the tech capabilities themselves, or offer them a community that they've developed. In some cases the fintech may seek to displace the established firm if they have deep enough pockets and a truly transformative idea. Competition and collaboration are both aspects of the same market.
Many older fintech firms see insurance as another vertical in which they can use the same artificial intelligence (AI) techniques, big data analysis, blockchain or other technologies that they've already used in the investment or retail banking arena , to disrupt a new area. Other newer start-ups are focusing on insurtech as a standalone vertical because they believe the younger unploughed field has more scope for growth. BuzzGroup falls into this later group.
Investment is obviously a key part of the journey of any fintech start-up. BuzzGroup has so far raised $9.2m in five rounds of equity fundraising from a mix of nine angel, seed and accelerator investors.
Wayra UK, a start-up accelerator organization that is run by the O2 mobile phone company that is part of Telefónica has been important in the development of BuzzGroup as they offer a range of mentoring, investment and other early stage support to young technology firms.
The Angels Den, a U.K. angel investor-led online platform that provides mentors and early stage money before opening it out to other investors, has also helped in the development of BuzzGroup.
CEO Downing later turned to the Startupbootcamp (SBC) InsurTech London accelerator to help find other later stage investors. She joined the first SBC InsurTech cohort in 2016.
"They have brought out the other investors," explains Downing. White Mountains is a Bermuda-domiciled financial services (FS) holding company traded on the New York Stock Exchange and is aiming to try and scale up the business.
"Not all start-up accelerators are helpful in establishing a start-up firm, especially as there are now so many trying to get into the game," says Downing. "But I found Wayar to be helpful in our early days and SBC InsurTech's program in the last couple of years as they are sector-specific to the insurance world."
"I was whittled down to the final 10 pitching companies in 2016 for the first SBC InsurTech London Demo Day last year. There were 26 shortlisted firms competing for a place and I have to say it is one of the most difficult things I've ever had to do. Pitching in front of a crowd of investors, insurers and other supporting partners that sponsor the program over a three day period in order to qualify was not easy. However, it made the Demo Day itself seem less scary in front of a live audience of other potential investors, journalists and insurers."
The SBC InsurTech event is supported by Zurich, Allianz, Admiral, Swiss Re, the Confused.com aggregator website, PwC, Old Mutal and many others who use it as an opportunity to spot good ideas and firms that they might wish to collaborate with or invest in.
"Even if I'd not been shortlisted by SBC I would have found the experience useful as I got some phenomenal feedback and tips from experienced professionals and mentors that are part of their program. That was invaluable in developing my ideas. My company has gone from strength to strength since."
Downing explained that she'd been circling huge insurance companies for six months in the early stages of her start-up before realizing that it was "futile" to approach them directly "as so many others were trying to do the same thing. Startupbootcamp gave me a way to get in front of large insurers and pitch my ideas." That is what accelerators can be good for, as well as raising funds and assisting marketing efforts.
Challenges: Funds, clients & recruitment
"The key challenges I've faced on my journey, apart from the obvious ones of getting funds and in front of insurers, have been around recruiting and retaining staff," says Downing.
"Finding the right people – from technologists to marketers – is not easy. Particularly when you cannot necessarily pay them what they would otherwise earn elsewhere in a more established firm that isn't a start-up."
One possible way around the recruitment challenge is to hire hungry youngsters who want to be part of an innovative new company and to perhaps offer them an equity stake in exceptional circumstances to help retain and motivate them.
"But you need to be careful with that to ensure long-term motivation," warns Downing. "It is necessarily a tool only for the early stages of a company's formation."
As start-ups grow the ability to hand out equity stakes naturally diminishes, especially as angel and seed fund investors will be hungry for their cut.
There are mentors, accelerators, angels, investors and clients out there ready, willing and able to help innovative start-ups but it's not a purely altruistic offering. Help is also only provided to those firms that have a strong enough business plan, demonstrable effective technology and a clear growth and diversification path. A team with enough drive, experience and ambition to deliver is also a help in winning investment money and launch clients.
Creating a start-up isn't easy but as BuzzGroup's development shows by focusing on the idea, end user, clients and using the available help out there, it is possible to get to the launch pad. Only time will now tell if Buzz continues to attract interest and makes it to the stars as one of the leading insurtech players in the U.K. The scale up challenge still awaits.