The Elbow Chart: How Rick Zullo Actually Decides What Makes an Insurance Startup Investable

Rick Zullo has never lost money on an insurance deal. Not one. Not since founding Equal Ventures in 2018.

The combined revenue of his firm’s insurance portfolio companies was under two million dollars at the time Equal Ventures invested in them. Today, that combined revenue sits somewhere between 250 and 300 million dollars. In roughly eight years, some of it in companies that are only a year or two old, that is 150x appreciation in revenue.

Rick is not a computer science major. He is not TMT. He came up through consulting, working with old, asset-based industries like energy and financial services, the kind of client roster where one week you are in cowboy boots visiting an oil rig in Texas and the next you are in Omaha with an insurance client. That background, not a Silicon Valley pedigree, is exactly what he believes gives Equal Ventures its edge.

In Episode 170 of InsurTechTalk, Rick walked me through the actual framework his firm uses to evaluate insurance startups, why reinsurance capacity is quietly becoming one of the hardest and most valuable moats in the industry, and why he agrees, almost word for word, with something Jonathan Crystal told me a few months earlier: InsurTech is dead, long live insurance.

About Rick Zullo

Rick Zullo is the Founder and Managing Partner of Equal Ventures, an early-stage venture firm investing across four verticals: insurance, supply chain and logistics, climate and energy, and retail. Before founding Equal Ventures, he built his career in consulting, working primarily in energy and financial services rather than the traditional venture path through technology or TMT. He holds an MBA with honors from Columbia and an undergraduate degree from the University of Richmond. Equal Ventures is currently investing out of Fund II. The firm recently added Garrett, the former president of CRC, as a venture partner, and counts industry veterans like Sean Ellis (formerly of NFP, now running Distributed Ventures) among its longtime collaborators.

Why Rick’s Background Is the Point, Not a Detour

Rick is direct about this: he was never going to out-compete the top venture firms on the next hot enterprise IT deal coming out of Silicon Valley. That was never his advantage. His advantage was spending decades in the parts of the economy that traditional venture capital largely ignored, the trillion-dollar industries that most of his peers, who had spent their entire careers in California, viewed as problems for engineers and CTOs rather than genuine market opportunities.

His observation about the insurance software landscape as recently as five years ago is blunt: it was deplorable. The same was true in supply chain, the same was true in energy. Venture capital is only now catching up to industries that represent the actual bedrock of the economy.

AI’s Impact Across Equal Ventures’ Four Verticals

Rick’s read on where AI is having the most impact right now, across all four sectors his firm invests in, was unambiguous: insurance, with energy a distant second.

Why Distribution Economics Are Different in Insurance

This is a structural point worth understanding clearly. In most industries, operational efficiency gains get captured by the customer or squeezed by a supplier renegotiating terms downward. In insurance distribution, commission rates are largely fixed by carriers. That means operational improvement flows straight to the bottom line, and carriers reward scale and performance with better commission rates, not worse ones.

Rick cited an unnamed distribution business in the Equal Ventures portfolio, incubated with a founder previously CEO of a multi-billion dollar company, now generating EBITDA margins north of 50 percent as a company less than two years old. Historically, agency EBITDA margins in the 5 to 15 percent range were considered normal. AI-driven operational efficiency is rewriting that math entirely.

Why the Risk-Bearing Side Is Different

On the underwriting and risk-bearing side, Rick’s firm holds a specific and somewhat contrarian view: OPEX is not the lever that matters. The real opportunity is what he calls bending the risk curve, using AI for better real-time data collection, real-time intervention, and simulation to genuinely improve risk prediction and mitigation, not just cut costs.

The Coming Reinsurance Divergence

One of the more provocative predictions in the conversation came from a discussion Rick had with an LP who runs one of the largest asset management firms in the world. Asked where he saw potential downside risk from AI disruption, Rick’s answer was reinsurance.

His thesis: a “super El Nino” is coming, following several years of a softening cat market after a stretch of hard losses. When that next major catastrophe year hits, he expects a sharp divergence between reinsurers and cedents who have genuinely leveraged AI for real-time data and mitigation, and those still pricing risk off decades-old actuarial tables. He expects that divergence to become most visible in the back half of this year or into 2027, and expects it to produce real, painful losses for the underprepared side of that split.

Reinsurance Capacity Is Getting Harder to Access, Not Easier

This directly challenges an assumption a lot of the market seems to hold, that non-traditional reinsurance capacity is increasingly flowing down to fill gaps for niche MGAs. Rick’s read from his own capacity partner relationships is the opposite.

Why Reinsurers Are Consolidating, Not Diversifying

• Reinsurers want to consolidate behind growing books of high-performing, proven business, the same consolidation logic carriers apply on the distribution side
• The internal bureaucratic cost of underwriting small, unproven, niche lines is high relative to the potential return for a reinsurer
• Ten years ago, in Rick’s assessment, virtually every MGA could get capacity. Today it is significantly harder, and he sees that as a rising barrier to entry rather than a temporary market condition

The Stand Case Study

Stand, a company in the Equal Ventures portfolio, began in wildfire risk management, specifically around California’s FAIR Plan and E&S exposure, before the Palisades fire made that risk category impossible to ignore. When the company was seeking its first commercial paper, pre-everything, Rick’s own reinsurance contacts told him plainly: no one is writing paper for wildfire, and this was “zero shot,” essentially impossible.

Stand’s leadership team, including a former CEO of Metromile and executives with backgrounds from Hotel Tonight, WePay, and Policygenius, got it done anyway. What looked like an insurmountable barrier to entry became, once cleared, a genuine structural advantage: very few competitors could replicate access to that capacity.

The Bluefield Specialty Case Study

Bluefield Specialty writes across 17 to 18 niche insurance product lines, low-catastrophe-exposure, episodic risks that most underwriters have no interest in touching: jet skis, ATV rentals, boats, trampoline parks, haunted hay rides. The company’s first capacity lines, for jet ski and ATV rentals, took a long time to secure.

Once secured, and once loss ratio performance proved out at what Rick described as several standard deviations better than industry norms, that capacity access became a genuine strategic advantage. Reinsurance partners now look at Bluefield’s full book and are willing to extend capacity into adjacent lines specifically because the underlying performance has been proven. Rick compared this dynamic to how Kinsale, K2, and Ryan Specialty have built their own ability to place risks that other underwriters simply cannot.

InsurTech Is Dead, Long Live Insurance

Rick’s agreement with Jonathan Crystal’s framing from Episode 163 was immediate and enthusiastic, he called it one of his favorite episodes on the show. His own articulation of the same idea adds important precision.

What Actually Died

The InsurTech businesses that have genuinely failed, in Rick’s assessment, were built around distribution advantage or OPEX advantage without a true underwriting advantage underneath. The first wave of InsurTech wiped out real capital and real businesses because companies grew extremely fast, sustained massive long-tail losses, and by the time those losses surfaced, the market for InsurTech assets, even genuinely good ones, had gone to zero.

What It Takes to Survive

• Vintage diversification across underwriting cohorts
• Aging books appropriately rather than chasing 10x growth on a single line every year
• Building complementary products on top of each other rather than pure single-line scale
• Understanding that OPEX efficiency and AI-driven automation, while valuable, are not material advantages on the risk-bearing side of an insurance business

Rick specifically distinguished this from the broader AI enthusiasm around software and BPO (business process outsourcing) businesses, like AI-driven TPA models, arguing that insurance-specific underwriting dynamics are not fully appreciated by the broader investment market chasing that adjacent excitement.

The Elbow Chart: What Actually Makes an Insurance Startup Investable

This is the intellectual core of the conversation, and it is a genuinely distinctive framework worth understanding in detail.

Rick is explicit that traction is never an indicator Equal Ventures weighs for an insurance company, and early unit economics are not either. What they actually evaluate is terminal value and moat, specifically the durability and compounding nature of a company’s underwriting advantage.

The Framework, Explained

Picture a 45-degree line representing pure randomness, a coin flip’s ability to predict whether a risk event will occur. Now picture a real, zigzagging line representing the actual results of underwriting decisions made across the industry. The entire underwriting profit of the insurance industry, hundreds of billions of dollars, potentially trillions, exists in the thin spread between that zigzagging line and pure randomness.

What Rick looks for is a company’s ability to use technology and proprietary data to widen that spread, to create what looks, visually, like a dramatic elbow bending away from the randomness line. Critically, he wants to see that elbow widening year over year, evidence of a compounding advantage rather than a one-time edge.

Why a Suspiciously Cheap Quote Is a Red Flag, Not a Selling Point

Rick’s practical litmus test: customers will always buy insurance if it is priced appropriately. If you see a startup offering a quote 10x cheaper than the rest of the market, that is not evidence of superior technology. It is evidence the company is either buying market share while sustaining unsustainable losses, or providing coverage so thin that customers will discover the gap the moment they need to file a claim. Rick noted this pattern was widespread in the first wave of InsurTech.

Equal Ventures’ Actual Philosophy: The Berkshire Hathaway of Venture Capital

Asked what’s next, Rick’s answer was refreshingly unglamorous. He described the current market as trapped between two hyperbolic extremes: chasing 0-to-100 AI businesses, or funding speculative science projects like missile defense systems and data centers in space.

Equal Ventures wants neither. Rick’s explicit aspiration is to be the Berkshire Hathaway and Charlie Munger of venture capital, partnering with founders building businesses meant to be held for 20 years, compounding assets consistently underpriced by the broader market that nonetheless keep going up. He is comfortable, by his own description, being the least sexy investor on the planet.

The Carlota Perez Influence

Rick credited economist Carlota Perez directly and without hesitation: he would not have started Equal Ventures without her work on technology revolution cycles. Her framework, the Installation Period, the Turning Point, and the Deployment Period, has become the intellectual foundation for how Equal Ventures thinks about timing across all four of its verticals. Rick’s assessment, nearly two decades after her key predictions: everything she said has come true.

The Closing Answer: Bridging Legacy and Next-Gen Assets

Asked what the industry should be talking about more, Rick pointed to something that runs through nearly every story he told in this conversation: how legacy, sometimes “zombie,” assets can better cohabitate and combine with next-generation technology and capital, rather than being displaced by it.

His clearest example: Equal Parts, an agency technology partnership model that took an agency running 5 percent EBITDA margins and turned it into 55 percent. Rick draws a direct parallel to how Acrisure created enormous wealth for agency owners through a similar partnership logic, and believes there is significant unrealized opportunity to replicate that value creation elsewhere in the industry.

His core argument: one plus one can genuinely equal more than two, when an agency owner’s relationships and institutional trust combine with a technology partner’s operational and data capabilities. This does not always have to take the form of an AI rollup. Rick sees many possible structures, but the common thread across all of them is partnership with long-term-oriented operators, not short-term “tourists” passing through the insurance business for a quick markup.

Notably, Rick said his personal goal at ITC this year is not meeting more startups, but deepening partnership conversations with corporate incumbents.

Key Takeaways

• Traction and early unit economics are explicitly not what Equal Ventures evaluates in insurance startups; terminal value and compounding underwriting moat are what matter
• The “elbow chart” framework measures whether a company’s technology genuinely widens the spread between real underwriting results and pure randomness, and whether that spread compounds over time
• Reinsurance capacity access has become significantly harder over the past decade, not easier, turning the ability to secure commercial paper into a genuine structural moat for companies like Stand and Bluefield Specialty
• A coming cat-heavy year could sharply divide reinsurers and cedents who have genuinely adopted AI-driven risk assessment from those still relying on legacy actuarial models
• InsurTech companies built on distribution or OPEX advantage without genuine underwriting advantage are the ones that failed; vintage diversification and appropriately aged books separate survivors from casualties
• Equal Ventures’ explicit philosophy rejects both 0-to-100 AI hype and speculative moonshots in favor of compounding, cash-flowing businesses built to be held for decades
• The next major opportunity in insurance may be partnership between legacy agency and carrier relationships and next-generation technology, not pure disruption