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It's a pretty common model for VC backed startups in financial services these days, especially ones that involve risk assessment.

I think it is kind of a Potemkin village approach. Let's be honest, they don't want to actually solve the hard problems of underwriting things, they want to appear to solve them so they can impress VC's and get millions of dollars in funding for themselves. Unfortunately you can't help them with that goal.

For them, what better group to work with than the very companies that were funded by the same VC's they're trying to impress?

This approach works in both directions, since for one these companies are by definition well connected and well funded so they don't have to make tough underwriting decisions, and two VC's are for the most part living in a bubble, so by signing up a couple dozen venture backed startups they can create an "everyone is using it" impression.

Needless to say there are problems with this approach. The main one being the addressable market of VC backed startups is tiny and probably not worth that much to corner unless your revenue per customer is massive. And the other problem is that it's not clear you're actually learning anything if you're not really exposed to the wider marketplace.

They'd counter by saying they're getting good at their business and achieving scale and building a great product, and that expanding beyond their own bubble eventually will be easy once they get that product built up.

Maybe they're right. But until they do it's hard to consider any of the companies employing this model to be successful yet.






I had a startup that I operated for 3yrs full time. Once, we almost lost a deal because we could not get E&O and Liability insurance in time. The process was backwards -- heck, faxing applications in this day and age?

I have not used Vouch, but I know that insurance is vast and a very messed up industry. It is unrealistic to think they can solve all problems as a tiny company. However, it is heartening to see them try to solve some problems, at least for some people -- hopefully this spurs change in the industry. I wish them luck on their particular effort.

Honestly speaking, even if the underwriting approval process takes months, there is no reason in 2019 that ANY insurance company should direct you to faxed forms, as some incumbents do. Even if no other problem gets solved, e-applications would be a huge win.

Also, to be fair to this company, sometimes, what you underwrite is not up to you. This small company (not sure how they are structured) is probably not holding the risk. They either broker the risk, or take it on and later bundle it away. That means they are forced to only accept applications they can actually offload after origination. Don't hate the player, hate the game.




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