What if you could assess the wildfire risk not only of a region but of a specific parcel of property? A Bay Area startup is using data to do just that.
Zesty AI taps into a variety of data to create risk profiles for real estate owners and property insurance companies, with a particular focus on severe climate events like wildfires, hail and flooding.
On Tuesday, the company announced $33 million in new funding, including a Series B round as well as some debt. It declined to disclose the exact split of equity versus debt but the company raised $20 million in equity funding in early July, according to an SEC filing. It brings Zesty AI's total funding to $50 million.
Centana Growth Partners led the equity portion of the round, which also included fintech startup Brex.
The company was founded in 2015 by CEO Attila Toth and head of product Kumar Dhuvur, both former McKinsey and SunEdison employees.
"The idea behind the company was that there was so much new data sources such as imagery from satellites… imagery from low flying aircraft, and there's new ways of analyzing data such as computer vision so that we can better explain properties from the sky without ever setting foot on the premises," Toth told me.
Armed with more information, property owners could potentially take action to mitigate the risks of extreme weather events and insurance companies would be able to make more accurate assessments down to individual parcels.
And then a couple of years later, the Tubbs fire ripped through Sonoma and Napa counties, killing 22 people and destroying more than 5,600 structures.
"Many lives were lost and about $10 billion of homes and businesses were destroyed in places where people did not expect a fire to hit," Toth said. "We thought, we have been building this company using earth observations from satellites and artificial intelligence, what if we put this to use for better understanding natural disasters such as wildfires? And what if we helped insurance companies better underwrite risk? That was the epiphany."
To achieve this, Zesty AI ingests data from more than two dozen sources like satellite imagery and weather stations to create risk profiles. And its models can also take into account mitigation efforts implemented by property owners.
It charges insurance companies annual subscriptions to license its services, and although it doesn't provide any products directly to consumers, the insurance companies are able to produce reports for their customers.
The state of California is currently considering a new regulation that would mandate this type of transparency about wildfire risk scoring. Insurance Commissioner Ricardo Lara announced the proposed rule in early 2021.
“I have consistently heard from consumers that many insurance companies keep them in the dark about their property’s risk profile, leading people to spend thousands of dollars cutting down trees or hardening their homes without truly knowing how it will affect their insurance,” Lara said in a press release at the time. “Giving consumers their wildfire risk scores and the ability to lower them will incentivize the home-hardening and community mitigation efforts already underway to better prepare us for future wildfires.”
Zesty AI has around 50 enterprise business customers primarily across the U.S. and Canada, and the company will remain focused on serving North America over the next 12 to 18 months, but Toth anticipates expanding into Europe and Asia within the next three years. Its current customers include Amica, Aon, Berkshire Hathaway, Cincinnati Insurance, Farmers Insurance and the California FAIR Plan.
Toth also sees opportunities to eventually expand into new products that assess value, rather than risk, such as mortgages and other types of assets.
The company has close to 60 employees, and the team could grow to around 100 by the end of the year, Toth said. Originally incorporated in Oakland, the company has embraced a remote work culture and now considers itself based in San Francisco.
