On at least his sixth successful business since a gyro cart in college, serial entrepreneur Ilya Bodner isn't planning the typical stay-one-year-and-leave path following the acquisition of the startup he's been most passionate about.
Bold Penguin Inc. announced its acquisition two weeks ago by American Family Insurance Mutual Holding Co., four years since it launched in Columbus, Ohio. All 160 employees come aboard, including co-founders Bodner, CEO, and and Ben Clarke, chief data officer. The deal awaits regulatory approval to close. Financial terms were not disclosed.
"I am here for an extremely long time," Bodner said. "We have not finished the work we started. This gives us more superpowers to accomplish the things we want to do.
"They were the best ... at demonstrating to us our neutrality and our obsession about being standalone will be well-preserved."
The Madison-based insurer won't mess with success: Bold Penguin continues as an independent software unit, a "Switzerland" helping multiple carriers digitize a burdensome process. And it will keep growing in Columbus – the company recently renewed its lease in the Chase tower downtown, even though employees are working from home during the coronavirus pandemic.
"I’m a die-hard Columbus, Ohio, guy," said Bodner, who arrived as a 10-year-old refugee in the early 1990s. "We did everything through the lens of: This is good for Columbus and Central Ohio."
American Family has more than 13,500 employees and annual revenue of $12.2 billion. The insurer's venture arm was an early Bold Penguin investor.
Bold Penguin, which automates the cumbersome rate-quoting and binding process in commercial insurance for small business, had $10.6 million revenue in 2019 and on average had doubled each of the previous three years, according to data in Columbus Business First's Fast 50 awards last fall. Revenue was anticipated to double in 2020 as demand soared through the dual crises of a pandemic and racial justice protests. The startup made two acquisitions of its own in 2020.
About 2 million quotes were processed on the platform last year, 1/3 of the average annual number of small businesses that shop for insurance.
Named after the brave bird in nature documentaries that jumps first under the ice floe, Bold Penguin faced the same choice of any fast-growing software company that wants to boost growth to the next stage: Seek more venture investment, go public, or get acquired.
"I guess the fourth (option) is do nothing, but that’s not what a startup that wants to go places tends to think about," Bodner said. "We thought long and hard about raising another round.
"I’ve always thought of Bold Penguin as a business unit or a division or an entity within a major insurance corporation," he said. "We do one thing, very well."
There were several suitors.
Bold Penguin has landed another yet-to-be named major insurer since the merger announcement, a testament that it can continue as a neutral tech backbone for many insurers – "ferocious about its independence," he said – to make it easier for small businesses to select and understand commercial policies. American Family's history of continuing the independent growth of other acquisitions, plus its personal history as an investor, helped seal the deal.
"We’re Midwestern and they’re Midwestern, and we sort of speak the same language," Bodner said. "They have daily huddles, we have daily waddles. They have the state of the family, we have the state of the glacier.
"We started thinking about AmFam, and we started checking with our customers. Some officially and some unofficially, what do they think about it?"
Universally, customers including Columbus giant Nationwide Mutual Insurance Co. were fine with the idea.
The transaction, for undisclosed terms, 100% buys out previous owners, including the founders, early employees who bought stock options, and Hudson Structured Capital Management Ltd., which led a $32 million round in 2019.
But the upshot is the office continues its local growth, fueled by existing profits and also backed by a company with not only vast resources but a well-respected name. Being a subsidiary actually opens up more client opportunities in a risk-averse industry, Bodner said.
"For big companies to rely on a startup is dicey. Now we’ve crossed the chasm," he said. "With the credibility and backing of American Family, we’re more trusted, we’re more respected, we’re more welcomed, we’re less of a risk or concern ... to all the other major institutions we are a core system provider to. That opens the doors."
