Obie Raises $10.7M Series A Funding - Insurtech News

Obie Secures $10.7 Million in Series A Funding

Obie, a company specializing in an insurtech platform designed for landlords, has successfully completed a $10.7 million Series A funding round. This financing was spearheaded by Battery Ventures.

Investor Participation

Several other firms contributed to this funding round, including Thomvest Ventures, Funders Club, MetaProp, and Second Century Ventures. Their investment underscores the growing interest in specialized insurtech solutions.

Targeting a Niche Market

Obie’s software is intentionally focused on a specific segment: small-to-medium sized apartment landlords. These landlords typically manage single-family rentals and/or larger apartment complexes. This targeted approach allows for a highly tailored service.

Rapid Quote Generation and Cost Savings

Based in Chicago, Obie also completed the Y Combinator program. The platform differentiates itself by providing instant insurance quotes – typically within three to five minutes. Furthermore, the company asserts that its policyholders can realize savings of 25-30% on insurance premiums.

Over the past year, Obie has facilitated insurance coverage for properties valued at over $3 billion.

Founders' Expertise

Aaron and Ryan Letzeiser, the co-founders and brothers behind Obie, bring complementary expertise to the venture. Aaron’s background is in insurance, while Ryan has experience in real estate private equity. They identified a gap in the market.

“A significant portion of SMB landlords have been overlooked by the insurance industry, yet there are 11 million of them,” Aaron explained. “On average, we consistently offer premiums that are 31.7% lower than prevailing market rates.”

Demonstrated Growth

The demand for Obie’s services is demonstrably increasing. Premiums reached approximately $1 million within the first 12 months of operation. This figure has since grown to around $10 million over the last year.

National Expansion

Alongside the funding announcement, Obie revealed the expansion of its property and casualty insurance services to encompass all 50 states.

How the Platform Operates

Landlords and investors complete a questionnaire on Obie’s website. The platform extracts key data from these responses and combines it with publicly available and proprietary information.

Factors such as the landlord’s proximity to the property are considered, as this can indicate proactive maintenance and responsiveness to tenant needs.

Matching Applications with Carriers

Utilizing a “proprietary” algorithm, Obie matches applications with insurance carriers based on their specific “risk-appetite” profiles. For instance, some carriers may avoid properties constructed before a certain date. Landlords then receive a quote.

Upon acceptance of a quote, underwriting can be completed “immediately,” according to the company.

Simplifying Insurance for Landlords

Ryan Letzeiser stated that the core objective is to establish Obie as “the most straightforward solution for landlords to obtain the necessary insurance.”

Future Plans and Product Development

The newly acquired capital will be allocated to product expansion and a strategic effort to “dominate the entire vertical.”

“We’ve operated as an agency thus far, but we are developing our own product, anticipated to launch at the close of the second quarter,” Aaron stated. “This will be similar to models like Lemonade and Hippo, and is being developed in partnership with a major insurer.”

Transitioning to a Carrier Model

Obie believes it has successfully validated its brokerage model and intends to leverage the collected data to become its own insurance carrier. The transition is expected to be gradual, with continued partnerships with existing carriers until full approval is secured across all 50 states.

“Our ultimate aim is to evolve from an agency to a carrier,” Ryan explained. “This is a proven strategy, as demonstrated by companies like Next, Hippo, and Lemonade.”

Understanding Client Needs

The Letzeiser brothers believe their combined experience allows them to effectively communicate with their clientele.

“We’ve personally experienced the challenges faced by our clients, enabling us to understand how premium costs and coverage impact their overall business strategy,” Aaron said.

Industry Validation

Michael Brown of Battery Ventures, who now serves on Obie’s board, recognizes the competitive advantage of the startup’s integrated offering.

“The ability for their customers to purchase property and general liability insurance directly within the software they use to manage their business is a compelling and effective distribution channel for Obie,” Brown commented to TechCrunch. “Landlords can access services directly or through partner channels.”

Brown also noted that Battery’s investment decision was influenced by Obie’s focus on commercial lines, which the firm believes represent larger, less competitive markets with the potential for higher premium values.