Lula, a Miami-based insurance infrastructure startup, introduced at present it has raised $18 million in a Series A spherical of funding.
Founders Fund and Khosla Ventures co-led the spherical, which additionally included participation from SoftBank’s SB Opportunity Fund, hedge fund supervisor Bill Ackman, Shrug Capital, Steve Pagliuca (Bain Capital co-chairman and Boston Celtics proprietor), Tiny Capital’s Andrew Wilkinson. Existing backers equivalent to Nextview Ventures and Florida Funders additionally invested, along with numerous insurance and logistics teams equivalent to Flexport.
The startup’s self-proclaimed mission is to offer firms of all sizes — from startups to multinational firms — with insurance infrastructure. Think of it as a “Stripe for insurance,” its founders say.
Founded by 25-year-old twin brothers and Miami natives Michael and Matthew Vega-Sanz, Lula truly emerged from one other enterprise the pair had began whereas in faculty.
“We couldn’t afford to have a car on campus and wanted pizza one night,” Michael recollects. “So I thought it would be cool if there was an app that let me rent a car from another student, and then I thought ‘Why don’t we build it?’ We then built the ugliest app you’ve ever seen but it allowed us to rent cars from other people on the campus.” It was the primary firm to permit 18-year-olds to lease automobiles with out restrictions, based on the corporate.
By September 2018, they formally launched the app past the campus of Babson College, which they have been attending on scholarships. Within eight days of launching, the brothers say, the app turned one of many prime apps on Apple’s App Store. The pair dropped out of school, and inside 12 months, they’d automobiles out there on greater than 500 faculty campuses within the United States.
“As you can imagine we needed to make sure there was insurance coverage on each rental. We pitched it to 47 insurance companies and they all rejected us,” Michael stated. “So we developed our own underwriting methodologies or underwriting tools into the operations and had the lowest incident rate in the industry.”
As the corporate grew, it started partnering with automotive rental suppliers (suppose smaller gamers, not Enterprise, et al.) to complement its provide of autos. In doing so, the brothers quickly realized that probably the most compelling facet of their providing was the insurance infrastructure they’d constructed into it.
“Our rental companies begin to put a significant portion of their business through our platform, and one day one called us and asked if they could start using the software in the insurance infrastructure we’d built out in the rest of our business.”
That was in early 2020, proper earlier than the COVID-19 pandemic hit.
“At that moment, we began to realize, ‘Hey maybe the big opportunity here is not a car-sharing app for college students, but maybe the big opportunity here is something with insurance,’” Michael stated.
Just a few weeks later, the duo shut down their core enterprise and by April 2020, they pivoted to constructing out Lula because it exists at present.
“In the same way that Stripe has built a payment API that eliminates the need for companies to build their own payment infrastructure, we decided we could build an insurance API that eliminates the need for companies to build their own insurance infrastructure,” Matthew stated. “Companies would no longer need to build out internal insurance systems or tools. No longer would they need to deal with insurance brokers to procure them coverage. No longer would they need to deal with insurance teams. We can integrate on to a platform and handle all things insurance for companies and their customers via our API.”
By August of 2020, the corporate launched an MVP (minimal viable product) and since then has been rising about 30% month over month after reaching profitability in its first 4 months.
Image Credits: Lula
Today, Lula gives a “fully integrated suite” of technology-enabled instruments equivalent to buyer vetting, fraud detection, driver historical past checks, and coverage administration and claims dealing with by means of its insurance companions. It has a ready listing of practically 2,000 firms and raised its funding to satisfy that demand.
“The main purpose for raising capital was so we can build out the team necessary to fulfill demand and sustain growth moving forward,” Matthew stated. “And apart from that, we also just want to further develop the technology — whether it be in the ways that we’re collecting data so we can get more granular and make smarter decisions or just optimizing our vetting system. We’re also just working toward developing a much more robust API.”
Existing shoppers embrace ReadyDrive, a car-sharing program for the U.S. army and a “ton of SMBs,” the brothers say. Investor Flexport might be conducting a pilot with the corporate.
“Every time a trucker picks up a load or delivery, instead of paying monthly policies, they will be able to pay for insurance for the two to three days they are on the road only,” Michael says. “Also, if someone is shipping a container via Flexport, they can add cargo coverage at the point of sale and get an additional layer of protection.”
Ultimately, Lula’s purpose is to behave as a provider in some capability.
Founders Fund’s Delian Asparouhov believes that the way in which millenials and Gen Zers make the most of bodily property is “wildly different” than prior generations.
“We grew up in a shared economy world, where apps like Uber, GetAround, Airbnb have allowed us to episodically utilize assets rather than purchase them outright,” he stated.
In his view, although, the insurance trade has not picked up on the huge shift.
“Typical insurance agents both don’t know how to underwrite episodic usage of assets, and they don’t know how to integrate into these typical of digital rental platforms and allow for instantaneous underwriting,” Asparouhov instructed TechCrunch. “Lulu is combining both of these technologies into an incredibly unique approach that digitizes insurance and gives us flashbacks to how Stripe disrupted the digitization of payments.”
Despite their current success, the brothers emphasize that the journey to get so far was not at all times a glamorous one. Born to Puerto Rican and Cuban mother and father, they grew up on a small south Florida farm.
“We started our company out of our dorm room and initially emailed 532 investors only to get one response,” Michael stated. “Founders just see the headlines but I just want to advise them to stay persistent and really keep at it. I’m not afraid to share that the company started off slow.”