Clearcover, a Chicago-based startup that’s changing the way people buy car insurance, just raised a new round of funding to help it expand its service across the U.S.
The startup announced Tuesday that it has raised $43 million in a Series B round led by Cox Enterprises, a media, communications and automotive conglomerate. Other investors include American Family Ventures, Lightbank and Chicago’s Hyde Park Angels.
The new funding brings Clearcover’s total funding to $54.5 million. The startup raised $11.5 million in a Series A round in 2017.
Originally founded in 2016, Clearcover has built a platform that uses artificial intelligence to make custom car coverage recommendations to customers at a cheaper rate. Clearcover is able to do this because it eliminates overhead costs, like brick-and-mortar offices, expensive ads and outdated technology, said the startup's Co-Founder and CEO Kyle Nakatsuji.
Clearcover pays its partners, like finance apps and automotive websites, to integrate an API it developed onto their websites. Once functioning on a partner's website, the API platform analyzes visitor data to provide personalized quotes to customers seeking to buy car insurance.
“We saw an opportunity to build a new insurance company that could do something no one else could, which was to use better technology to simultaneously provide better customer experiences and lower prices to insurance consumers,” said Kyle Nakatsuji, who is a former VC at American Family Insurance. “Doing both of those things at the same time tends to be very difficult.”
Though the company was founded a few years ago, it only launched its service to consumers last year in California. The state is still the only one Clearcover is available in, but Nakatsuji said the new funding will help the startup launch in new states, including Illinois.
The funding will also be used to double its staff across product, engineering and operations departments. Clearcover currently employs about 50 people, Nakatsuji said.
The new financing comes as Clearcover just wrapped up a busy year. In 2018, the startup doubled the size of its staff, beefed up its customer-based to the “tens of thousands,” and saw revenue exceed $10 million, Nakatsuji said.
“We run like a tech company, but we make money like an insurance company,” he added.
Clearcover is just one of several insuretech startups that have launched in Chicago over the last few years. Nakatsuji said being headquartered in a city that is becoming an insuretech hub of sorts has had its advantages.
“We chose Chicago intentionally when we were thinking about where to put the company,” he said. “We’re surrounded by a lot of big and successful insurance companies, and being able to draw talent from those places is helpful.”
