Goldman Sachs-backed fintech Even Financial just bought a life insurance startup
Even Financial, a startup that connects lenders and banks with consumers, just bought life insurance startup LeapLife, adding another product line just as insurers are seeing a surge in policies.
Even Financial offers a customizable machine-learning-powered platform that algorithmically targets and matches customers with credit cards, savings accounts, and loans, helping banks and lenders get a better bang for their marketing buck.
On the supply side, it partners with banks like Goldman’s Marcus and credit card companies like American Express, as well as lenders like SoFi and LendingClub. And it works with distribution partners like Acorns, Credit Sesame, and The Penny Hoarder, who then market these products to consumers.
“There’s a need to make consumer acquisition engagement more digital and create better search comparison experiences for consumers,” Phill Rosen, founder and CEO of Even Financial told Business Insider.
With the acquisition of LeapLife, Even will now be able to connect insurers like Lincoln Financial and Pacific Life with consumers. LeapLife was still in its seed stage, raising about $3 million since its founding in 2016.
Even did not disclose the value of the acquisition, but confirmed it was a mix of cash and equity, using a portion of last year’s fundraise.
Last September, Even raised a $25 million round co-led by Citi Ventures and MassMutual Ventures. Other investors include American Express Ventures and Goldman Sachs. At the time of the deal, it was valued at $180 million. It has raised $50 million to date since its founding in 2015.
A well-timed acquisition
With concerns of a funding drought amid the coronavirus pandemic, startups are keeping an eye on their runways and cutting costs through layoffs and furloughs.
But Even and LeapLife have been working on the deal since the fourth quarter of last year.
“It’s not something that we’ve committed to doing in the middle of the current macro issues,” said Rosen. “There is definitely going to be a pause on new deals getting done for a little bit. How long is [to be determined].”
But both Rosen and investors think the acquisition is well-timed given the current environment.
“It’s really well-aligned despite the larger issues that society is seeing,” said Rosen. “If anything, I guess you could say on-message for the current times.”
Life insurance agencies have seen a surge in applications, and industry experts say that the coronavirus has catalyzed more consumers to seek coverage, Business Insider has reported.
“Transitioning to this time, which is obviously a really tough time for society and consumers, I think highlights the need for protection products like life insurance,” said Chuck Svirk, principal at MassMutual Ventures and a member of Even’s board.
“Even’s ability to provide the infrastructure to digital distribution is just that much more important in this time,” Svirk said.
Leaning into the insurance market
Even had been planning an insurance vertical for some time, Rosen said.
“Internally we were debating between which category to do, whether it be property or life,” said Rosen. “What we found in LeapLife was that they had built some tech that was very aligned to how we do things.”
Even is a business-to-business startup, working with banks and distribution platforms that ultimately face the consumer. LeapLife, however, went to market with a consumer-facing life insurance recommendation product. But its search and recommendation platform for life insurance was similar to what Even had built for financial products.
“Their go-to-market strategy ended up being more consumer-oriented, which is I think what ended up leading to the acquisition opportunity for us” said Rosen. “But their tech was very aligned to how we go about building things.”
Given life insurance is a new vertical for Even, LeapLife will continue to operate under its own brand as the tech gets integrated into Even’s API — shorthand for application programming interface, which is the platform its users plug into on both the bank and distribution sides.
“We need to operate something in order to make sure we understand it really well before offering it to our partners,” Rosen said.
The LeapLife team, which is about half a dozen people, has already been onboarded at Even, and they’re currently working on integrating the tech as Even gets up to speed on the life insurance industry.
Ultimately, LeapLife’s product recommendation tech will be offered as a new vertical on Even’s platform to insurers. And using Even’s current distribution channels, life insurers will be able to access younger consumers, many of whom aren’t necessarily seeking out life insurance products.
“I think given the current mood of the market, this is incredibly timely because our audience tends to skew younger,” said Rosen.
Currently, only 6% of life insurance policies are sold online, according to Even.
“We’re going to be able to really rapidly improve the access of life insurance companies to these emerging digitally-enabled younger consumers who traditionally haven’t really thought about life insurance,” Rosen said.
Build versus buy
This deal is Even’s second acquisition (it acquired credit card rewards startup Birch Financial in 2018). And, like many startups, it’s debated building versus buying new tech.
“The ability to find attractive technology and strong technical talent within teams that have experience working together creates a number of synergies and cost-benefit analysis to making an acquisition,” said Svirk.
And insurance, like financial services, is a highly regulated industry with licensing requirements that vary state-by-state. So entering the insurance market is about more than just building it into Even’s API.
“The tech was on point and then, of course, they had also built out a team that was fully licensed and had great experience in this space, and knew exactly what they were doing,” said Rosen.
As it expands its product offerings to things like mortgages, Even is choosing to build. It’s been working on adding mortgages for over a year.
“We’re not going to be trying to rush into that, especially with what’s going on in the larger market,” said Rosen.