Distribution First, Capital Second

Susan Hatten dialed in from the Des Moines area, from the Holmes Murphy headquarters in Waukee, Iowa, where the office was at about 25 percent occupancy and a sense of normalcy was starting to return. BrokerTech Ventures (BTV) is also headquartered in Des Moines, with a co-working-style office downtown where some of its companies are coming back. She and Gilad first met at the Global Insurance Accelerator’s symposium day, and had since only met on video calls.

About Susan Hatten

Susan Hatten is Chief Operating Officer of BrokerTech Ventures, a company co-founded and co-owned by Holmes Murphy, where she has worked for seven years.

Where BrokerTech Ventures Came From

BTV began as an idea from M3 Insurance of Madison, Wisconsin, and its chairman, Mike Victorson: a brokers-backed capital fund that would lift insurtechs through capital and a distribution channel. In the process, the team found that brokers wanted more than a passive investment. The group, which included Holmes Murphy’s Dan Keough, asked what would happen if they started with an accelerator in which insurtechs could learn how a brokerage works with carriers and wholesalers, and, if they had conviction in the product, then back it with capital. In effect, she said, they flipped the model on its head.

The idea went on a whiteboard on May 17, 2019, and the company launched at InsureTech Connect that September. Holmes Murphy has a history of entrepreneurial ventures, including a group captive business founded by Dan Keough, and Susan said the founders knew they could have launched alone but would move faster and be better with others. They started with M3 as co-founding partner and grew to what she called a blue-ribbon roster of agencies, now 13 brokers and 12 insurers and wholesalers, from Silicon Valley to New Jersey, with Portland, Oregon and Tampa newly added.

At the time of the recording, BTV had 26 insurtechs in its portfolio: 24 graduates of the accelerator and others it had invested in directly.

The Five Towers

Susan described BTV’s five towers, from left to right.

1. Accelerator

The accelerator is the first point of entry. It includes a $50,000 SAFE, but she was clear that the real draw isn’t the check. Where most accelerators attract applicants with capital, BTV brings the distribution first: customers, pilots, proofs of concept and commercial engagements, with capital following.

She offered metrics. For the 12 insurtechs in the 2020 cohort, BTV modeled valuation before and after, and found their collective value rose by more than $70 million within four months of engagement. For the 12 companies in the 2021 cohort, BTV counted more than 115 commercial engagements (pilots, proofs of concept or signed customers) within five weeks, and founders told her BTV had put them two to four years ahead of their business plan. The 2020 cohort was heavily P&C; this year’s is more diverse, with health, clinical and benefit tech alongside commercial P&C, plus a third category focused on efficiency within agencies and between brokers and carriers.

2. Early-Stage Investments

BTV keeps an open-door policy and takes meetings all year with insurtechs that might not fit the accelerator. One example of an investment made through this tower is Highwing, an exchange that was born out of one of its brokerages and also worked with carriers. The tower also funds follow-on rounds: BTV made eight additional investments in the 12 companies from the 2020 cohort. Check sizes in the prior nine months ranged from about $500,000 to $1.5 million, mostly at seed, with a goal of being able to take a board seat or play a significant role. Susan expected sizes to grow.

3. Innovation

This tower sits in the center. It is where BTV works with insurers, wholesalers and reinsurers to understand how they see innovation, and it covers international relationships, including an accelerator partnership in Israel and efforts to expand in Latin America and Europe. It also houses Labs, a community of employees at the brokers and carriers who actually implement the new technology.

The Labs idea addresses a common reason pilots fail: lack of real commitment from the people who will use the product. If six of the 25 partner companies pilot the same insurtech, their six employee groups meet through Labs to share ideas and hurdles, and the insurtech receives one condensed message of feedback. Brokers also benefit, since a hurdle one firm solves doesn’t need to be solved again by another, and Susan hopes Labs will become a community where employees across firms brainstorm and compare notes.

4. Capital

After spending its first 16 months proving the model, BTV is building a fund that it leads, so it can take part in larger rounds such as Series A and B. Susan said an announcement was planned for later in the summer, and offered it as a first for the podcast.

5. Media and Communications

The fifth tower uses what BTV sees to drive content through podcasts, partnerships with ITC and Leader’s Edge, and other channels.

The Infinite Game

Susan said BTV’s agencies all subscribe to the philosophy in Simon Sinek’s The Infinite Game. In a finite mindset, which she said describes insurance historically, there is a winner and a loser. In an infinite mindset, the goal is to keep playing, which means bringing in “worthy rivals” who may compete but can help the industry move forward together. Gilad noted this fits the London market and venture syndication, where you collaborate with competitors on risk and still compete.

Looking Ahead to 2025

Susan said the 2021 focus is the capital fund, Labs, international expansion (especially Latin America and Europe) and the media tower. In five years, she expects success stories of insurtechs reaching their potential, more brokers and carriers, and a larger team than today’s lean one. She credited the leadership team, including Dan Keough, for the work behind the scenes.

Advice: How I Built This

For her recommendation, Susan chose Guy Raz’s How I Built This podcast, because she learns from founders telling their own stories, and she hopes BrokerTech Ventures will be on the show one day.

Key Takeaways

• BrokerTech Ventures flips the usual accelerator model: it brings distribution, customers and pilots first and backs the best companies with capital afterward.
• Its portfolio had 26 insurtechs, 24 of them accelerator graduates, with 13 brokers and 12 insurers and wholesalers as partners.
• The 2020 cohort’s collective valuation rose by more than $70 million in four months, and the 2021 cohort produced 115-plus commercial engagements in five weeks, according to BTV’s own figures.
• The accelerator includes a $50,000 SAFE; early-stage checks run about $500,000 to $1.5 million, and BTV made eight follow-on investments in last year’s 12 graduates.
• Labs groups the employees piloting the same insurtech, so the startup gets one consolidated feedback loop and brokers don’t repeat each other’s hurdles.
• A broker-led capital fund for larger rounds was planned for announcement later in 2021.
• Susan frames the partnership as an infinite game: bring in worthy rivals and keep playing.