Dorothy: Fast Cash After Disaster

The Challenge of Post-Disaster Funding

Following a disaster, expenses accumulate rapidly. Both floods and wildfires possess the capacity to inflict substantial damage to homes and commercial buildings, potentially destroying foundations or entire structures. For those affected, swift rebuilding is paramount, as they require shelter and the ability to continue providing services, often without enduring prolonged disruptions.

Insurance and Aid Delays

However, the urgency felt by individuals and businesses frequently encounters obstacles within the insurance industry and governmental aid distribution processes. Federal assistance can often take months, or even years, to become available. Similarly, insurance companies may require months to process claims, particularly in the aftermath of widespread events like hurricanes that generate a large volume of submissions.

Dorothy: Bridging the Financial Gap

Dorothy is a newly established company designed to alleviate this financial strain. It provides short-term loans – often referred to as “gap loans” – to individuals who already possess existing private insurance or federal flood insurance coverage.

The core concept is to deliver funds quickly after eligibility is confirmed, with Dorothy being reimbursed once the insurance claim is settled. Like other companies offering advance cash, Dorothy charges a fee based on the loan amount.

Underwriting and Risk Assessment

The company’s underwriting process evaluates the probability of a claim being approved, considering the specifics of the disaster and the details of the user’s insurance policy.

Founding and Inspiration

Arianna Armelli and Claudio Angrigiani launched Dorothy last year, during the COVID-19 pandemic. The name was chosen in reference to Dorothy from “The Wizard of Oz,” and her famous declaration, “there’s no place like home.”

The founders initially connected while pursuing graduate studies at the University of Pennsylvania, where they began exploring solutions to the challenges of disaster finance.

Personal Experience and Early Insights

Armelli’s personal experience with Hurricane Sandy in 2012 profoundly influenced her perspective. As an architect at the time, her Manhattan office was forced to evacuate.

She observed that many of her acquaintances remained unable to return to their homes weeks after the storm. Her volunteer work in the Rockaways, assisting with basement drywall removal, further solidified her commitment to disaster recovery.

From Infrastructure to Immediate Relief

Initially, Armelli believed that improved infrastructure and long-term planning were the answers to these problems. However, after six years in the planning sector, she realized that such solutions were often decades in the making.

Evolving the Business Model

Together with Angrigiani, they shifted their focus to improving the insurance system for end-users. They initially investigated the potential of enhanced flood data to improve underwriting and claims processing.

They soon discovered that the insurance industry was resistant to change, and that providing better flood data alone would likely have limited impact.

During the onset of the COVID-19 pandemic, they explored business interruption insurance, envisioning a “financial supplementary product” for businesses – essentially a credit line similar to a credit card.

This concept ultimately evolved into their current offering, which provides gap loans to property owners, both commercial and residential, to address immediate cash-flow needs.

Recent Developments and Future Outlook

Dorothy recently completed the Urban-X program and secured a pre-seed funding round in February. The company has also established a $250,000 debt facility to further test its gap loan product and currently has 25 qualified customers in its pipeline.

While still in its early stages, Dorothy represents a promising new approach to making insurance more effective during times of crisis.

A Growing Trend in Disaster Resilience

Dorothy is part of a growing number of startups developing innovative solutions in a world facing an increasing frequency of large-scale disasters.

This trend highlights the need for proactive and accessible financial tools to support individuals and communities in the wake of catastrophic events.