Editor’s Note: This story first appeared in the Washington Business Journal. See the original post here.
D.C.-based workers compensation startup Pie Insurance has raised $127 million to grow its special brand of online insurance policies for small businesses.
The funding includes $27 million that will go to the business itself and another $100 million to form a new affiliated company — Pie Carrier Holdings, which will create and purchase licensed insurance companies that Pie will use to issue a portion of its own insurance policies. That company will be majority-owned by one of the round’s investors, Gallatin Point Capital.
The round also included GreyCroft, SVB Capital, Aspect Ventures, Elefund and Sirius International Insurance Group Ltd. The new funding comes as the nation slowly begins to reopen amid the Covid-19 pandemic, which has forced millions of small businesses into total or near shutdowns.
But Pie Insurance, founded in 2017, continues to grow. The company saw its written premium grow 150% to nearly $19 million in the first quarter of 2020, per a release. It had previously raised about $60.33 million, the latest being a $45 million round in March 2019.
“Pie continues to demonstrate significant momentum, even in the current economic climate,” said Ian Sigalow, co-founder and partner at Greycroft, in a press release. “We’re pleased to help fuel the company’s next stage of growth as they transform the market for small business insurance.”
Pie CEO and co-founder John Swigart said in a press release the partnership, new affiliated company and fresh funding helps solve one of the biggest challenges facing a growing insurance tech startup — how to build a capital structure that both supports rapid growth and maintains a healthy balance sheet.
“This financing enables Pie to continue our expansion, even during these uncertain times, while also forming the foundation for our future,” Swigart said.
The company leans heavily on data analytics and eschews the traditional model of a human underwriter to help streamline and digitize its offerings, which it says keeps its costs down and is key to upending the competition.
According to Pie’s own analysis, 80% of small businesses overpay for worker’s compensation coverage, often by as much as 30%.
