Ryan Hartman's BMW had about 60,000 miles on it when it broke down. The mechanic told him the strange sound coming from under the hood was what they referred to as "the knock of death." It would take about $10,000 to replace the engine.
"I was just looking at him, completely aghast, and he was like 'I hope you've got an extended warranty on this thing,'" Hartman said. "I didn't. I actually kind of always thought they were scammy and a rip-off."
As painful as the engine replacement was, the experience sent him on a journey into the world of extended car warranties. What he found was that shopping for warranties was difficult and to get pricing quotes he had to share his email and phone number, which set off a chain of aggressive sales calls and outreach.
Soon, he decided to get into the car warranty industry and create a better way to shop.
Hartman built his career in the auto insurance industry with big companies like Geico and Esurance. He was an early hire at Austin startup The Zebra, which operates an auto insurance comparison platform. He wondered why there wasn't something like The Zebra for the auto warranty space.
Hartman, along with co-founders Philippe Koenig and Reto Bolliger, are going all in on a comparison marketplace for extended car warranties with their new startup Chaiz. And, on Aug. 7, the company announced it raised a $3.7 million round of seed funding led by ResilienceVC, a venture firm based in Washington, D.C., that focuses on fintech and startups that help low- and moderate-income Americans.
Chaiz, which launched in 2022, has developed a marketplace where consumers can compare pricing for extended vehicle warranties. The site requires vehicle details, such as make, model and mileage. But it doesn't require users to share their phone numbers or email addresses. It churns out quotes within minutes, and car owners can purchase warranties directly on the site.
Hartman said Chaiz, which currently has 10 employees, plans to use its new funding to expand its tech and marketing teams. The founders have also been trying to find office space with a hip vibe and room for about 10 employees in East Austin. They plan to grow the team to about 20 people, although not all will be based in Austin. Koenig, for example, is a serial entrepreneur who is based in London.
A winning pitch
Chaiz found its lead investor, ResilienceVC, after winning the Chimera Pitch Competition last year. The startup won $5,000, but it was the new connection that really paid off because a lead investor for Resilience was judging the competition.
"They cater to low-income and middle-income Americans, so they really liked that we're providing a service that could really help low- and middle-income Americans save a lot of money in case they had an unexpected breakdown," Hartman said. "Luckily, I could afford [the BMW breakdown], but 60% of Americans can't afford a $1,000 breakdown out of pocket."
Pitch events have turned out to be worth the effort for Chaiz.
"We went to a lot of pitch events," Hartman said. "I was on stage at probably a dozen. A lot of them were auto-focused, and we met some of the automotive insurer guys in Las Vegas at a car conference. So we met some of those guys, and a lot of it was just real scrappy, like trying to find out who's all in the industry, who might be a good fit for us and just doing a lot of cold outreach and sending them our pitch decks and all that type of stuff."
The startup was able to attract a relatively long list of investors that includes Anker Capital, Automotive Ventures, Everywhere Ventures, FJ Labs, Monte Carlo Capital, Never Lift Ventures, RedBlue Capital and Springtime Ventures. The startup's pre-seed investors include Everywhere VC, InsurTech NY, The Calm Fund and Project One Auto, a nationwide auto dealership.
Chaiz has already formed partnerships with 12 B2B warranty providers. The providers give Chaiz their wholesale rates, and Chaiz adds a small markup to that price.
"But our markups are a fraction of what a dealership or call center adds because we don't have overhead, because we're doing everything completely online, so it actually ends up saving the customer about 40%," Hartman said.
With the new funding, Chaiz plans to begin to develop similar comparison marketplaces for warranties for RVs, motorsports and home appliances.
"We definitely want to nail auto first, but then we will be expanding into those other secondary, tertiary and tangential type products," Hartman said. "There's a lack of comparison, a lack of research capabilities out there, and we think we will be the ones that could lead that."
