The following article originally appeared at Digital Insurance under the title 3 ways early-stage insurtechs can gain traction
During the early stages of a startup, so much attention is paid to growth: investors weigh its potential, social media mavens rack up followers by teaching you to hack it, and the tech landscape is awash in tools that promise to optimize for it. But for early-stage startups—particularly insurtech companies—growth is the easy part. Reducing friction for policyholders or channel partners and effectively competing or even beating incumbents on price, makes the path to market share quick.
But growth alone is not enough to sustain a business in the long term. Insurtech startups can build consistent momentum and long-lasting profitability by ensuring these three factors are a focus as they continue to develop over time.
1. Build a team with a strong business foundation
Countless startup founders, enticed by an industry ripe for innovation, build a team around a vision, create a technology and get investors on board without a problem. But they ultimately fail for one reason: they don’t have a strong enough knowledge of the industry.
It’s crucial that startups, especially early-stage startups, have a deep foundational understanding of their industry. This stage is where most insurtech startups get it wrong. Having a leader with extensive experience and passion for the industry promises a solid vision for the company, plus saves time and resources. At the end of the day, if you don’t already have proficiency in your industry, it’s difficult to build credibility among your prospective employees, partners and core customers. Although, for entrepreneurs interested in insurance and willing to explore business opportunities, it’s essential to spend enough time and resources learning the traditional ins and outs and contemporary trends to follow as a starting point.
2. Use product-market fit as a growth regulator
Once startups commercialize a product and begin to grow, they can sometimes expand too quickly to sustainably navigate challenges. As early-stage startups think about their scaling strategy, they should consider using an indicator within their product-market fit as a regulator for growth.
This is particularly helpful for insurance industry startups that have a target audience and try to tailor their products to different sub-groups within that audience.
No matter the industry, leaders need a North Star metric guiding them toward an honest and unbiased view of where the business is headed. They need to know whether growth is happening too fast or just enough.
3. Always speak to customer needs
Identifying target users and establishing customer personas is an essential part of building any startup business. These key factors eliminate confusion and narrow down who you’re creating products for. Depending on the capabilities of the team and the strength of their industry background, identifying user needs might be clearer in some cases than others. Sometimes target users don’t know what they need in the first place, so startups must have a clear understanding and be ready to provide.
Early-stage startups can also get so caught up in spending their time, energy and resources building and streamlining their technology that they lose sight of why they’re building. To steer clear of that trap, make sure growth efforts always address users’ needs.
In the case of insurtech startups, addressing user needs usually revolves around transforming either how insurance is purchased or how users and their partners can get the information they want faster. By staying user-focused, early-stage startups can ensure their growth happens consistently over time.
To build a sustainable growth model, keep iterating
While these steps and reminders are particularly beneficial to startups looking to grow and scale, they can – and should – be applied repeatedly across a company’s lifecycle, even as companies grow into bigger funding stages and go public.
Over time, everything changes. To achieve lasting growth, insurtech startups need to change along with their users. Continue investing in a knowledgeable team and maintain a balanced growth rate. Companies should aim to continuously refine, test and tweak their product in ways that push the envelope and address evolving user needs. Progress is the goal, not perfection. This iteration process is crucial for ensuring consistent and sustainable startup growth.
Kevin Abramson
President, Cover Whale
