Why We Invested in Walnut
Walnut is at the forefront of unlocking a $200 Billion opportunity in the generational transformation of insurance.
We’re excited to announce our partnership with Walnut; a breakthrough embedded insurance business. Our partnership brings both growth capital and distribution acceleration with leading challenger Neo Financial to Walnut’s already impressive growth trajectory. Currently offering subscription based Life and Cyber policies, Walnut will soon be expanding to offer a select range of P&C products as well.
As financial technology investors, we are continually monitoring advancements in the insurance vertical. We’ve seen the rise of successful Direct to Consumer (D2C) offerings in the United States like Lemonade and Kin; both of which went public well above $1 Billion in value. We’ve also seen the development of platforms like Qantas Assure in Australia which ties behavioural economics to underwriting and rewards clients for positive behaviour.
Yet in many ways, things haven’t changed. Legacy carriers take months, if not years, to integrate with. Policies advertised as instantaneously binding often just mean an instantaneous phone call from a broker.
It’s no wonder why leading market research firm Ipsos indicated over 70% of respondents would never recommend their insurance policy to a friend; the lowest score ever recorded by the firm.
Walnut aims to change this model by incorporating some of the best elements of emerging marketplace winners across the insurance product stack. By embedding distribution with channel partners, Walnut can reduce acquisition costs by up to 40%. By offering insurance as a subscription product, Walnut is opening up the vertical to new policyholders. And by eventually incorporating behavioural elements into the consumer experience, Walnut aims to reduce their claims loss ratio.
Walnut has built the entire stack for embedded insurance from the ground up; allowing them to integrate with any carrier and distribution partner in a matter of hours. Further, as a Managing General Agent (MGA), Walnut has the capacity to work with carriers to create truly instantaneously binding policies and has already done so with RBC Life Insurance Company in Canada and SBLI in the United States.
Walnut’s model of embedded distribution through channel partners like challenger banks and large financial institutions is aligned with our approach of providing unfair advantage to our portfolio companies in this area. In the short time that Walnut has been working with us, the company has increased their addressable market by close to 2 million customers through partnerships with Neo Financial and others within the Harvest network.
Yet what impressed us the most is Walnut’s founding team. Derek Szeto, Walnut’s Co-founder and CEO, is one of the most accomplished entrepreneurs in Canada. As the Founder of RedFlagDeals, Derek grew the business to become the largest consumer savings platform in the country before selling the business to Yellow Pages in a landmark deal. Adrien Niblock, Walnut’s Co-Founder and CPO, has the product and technical expertise to make this work, spending the past five years as a senior product leader and engineer at FullScript.
We’re very excited about Walnut’s trajectory and being one small part of their journey to creating an easier and better insurance experience that everyone will enthusiastically recommend.
