Insurance technology startup Mile Auto Inc. has raised $4 million, less than half the amount of its seed round in May 2021.
The company took additional investments so it doesn’t “run low on cash” during its upcoming growth plans in case of a recession, Mile Auto CEO and co-founder Fred Blumer said. The startup plans to expand the business to more states and grow its staff.
The funds came from existing investors including California-based Ulu Ventures, Emergent Ventures and Sure Ventures, and Louisville, Kentucky-based Thornton Capital, along with other angel investors, Blumer said. It brings the company’s total funding to over $16 million.
Mile Auto uses computer vision and machine learning technology to provide auto insurance to low-mileage drivers. Users photograph their odometer then upload it to the company’s database. The company charges a monthly base rate, plus a few cents per mile.
Mile Auto's services are active in nine states including California, Texas and Georgia. Following the raise, it plans to expand to New York, New Jersey, Wisconsin and Florida, giving it access to around 70% of the U.S. vehicle market. Blumer's goal is to be in all 50 states within three years.
Up to 10 employees will be added to its staff of 28, Blumer said. Most hires will be in Atlanta and focused on product design, customer support and claims specialist roles.
Mile Auto preps for more growth
Mile Auto's pricing model is competitive with other policies for people who drive less than 10,000 miles per year, such as urban residents who bike or take public transit to work. The automotive usage-based insurance market is projected to grow globally from $31 billion in 2021 to $120 billion by 2028, according to market research firm Fortune Business Insights.
In 2019, the company partnered with Porsche Financial Services Inc. for insurance specifically to its customers. Last year, it partnered with Ford Motor Co. to offer low-mileage savings. It has also partnered with Honda and Hyandai, Blumer said.
In recent years, Allstate Corp. and Nationwide Mutual Insurance Co. have launched their own pay-per-mile policies. Blumer says that helped his business. As awareness for the policy increased, people without those plans found Mile Auto through independent agents.
Mile Auto insures around 10,000 vehicles and has sold $20 million in premiums this year, Blumer said. It expects those numbers to grow around 30% quarter-by-quarter. Earlier this year, it ranked No. 477 on the Inc. 5000 fastest-growing private companies list.
The company launched through ATDC, Georgia Tech’s startup incubator and raised $10.3 million last year. It recently expanded its office footprint by moving to The Battery. Blumer says Atlanta's proximity to auto-based companies such as Cox Automotive, Verizon Connect and Porsche Cars North America Inc. makes the city ideal for auto technology startups.
Career in connecting vehicles
Blumer has worked in the connected vehicle industry for 18 years. He was the co-founder of Hughes Telematics, an Atlanta company that offered diagnostic services for vehicle management, which was acquired by Verizon Communications Inc. for $612 million in 2012.
From 2012 to 2017, he was the CEO and co-founder of Atlanta connected vehicle data company Vehcon Inc. During that time, he was inducted into the TU-Automotive Hall of Fame.
After Hughes, Blumer worked on State Farm’s Drive Safe & Save program. Mile Auto was inspired from his concern that auto insurance companies were infringing on driver’s privacy and inaccurately measuring their miles.
“I went to the big insurance companies and said, ‘Mileage is the most important data for insurance, and we've got this new technology’ and they said, ‘We're not interested because we don't want our low mileage drivers to know that for generations we've been overcharging them,’” said Blumer.
