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Since its founding in 2015, AXA Strategic Ventures (ASV; Paris) has focused on early-stage investments in emerging strategic innovations relevant to the insurance, asset management, financial technology and healthcare services industries. It has now announced its first growth equity investment in a cloud-based core insurance platform, with the announcement One, Inc.’s latest funding round. ASV led the $20 million round, with participation from MassMutual Ventures and H&Q Asia Pacific. The round brings One, Inc.’s total funding to $36 million, since its first round in 2014.
Founded in 2005, One, Inc. has recently made inroads in the insurance technology market with its ProcessOne payment processing capabilities. However, the company has developed the InsureOne suite, which it calls a comprehensive software-as-a-service (SaaS) insurance platform that also includes policy administration, billing rating, agency management, customer relationship management, document management, data warehousing, business intelligence and e-signature. During the last three years, One, Inc. has tripled its revenue every year, and its customer base has nearly quadrupled.
“AXA and MassMutual have been heavily investing in InsureTech, and it is interesting that they see a cloud-built core platform that fits their filter for investment,” comments Karen Furtado, partner at research and advisory firm SMA (Boston). “One, Inc. is unique the way it handles the shift in insurance distribution models. More than just a core system it is a core platform—many are challenged to understand this distinction, but certainly AXA Strategic Ventures are not among them.”
From Early-Stage to Growth Equity Funding
During its roughly year-and-a-half existence, ASV has invested in companies such as Limelight Health (San Francisco) a provider of mobile, cloud-based technology for employee health benefits processing, and PolicyGenius (Brooklyn, N.Y.), an online direct insurance distribution play aiming at policies with lower value than typically interests agents and financial advisors. One, Inc. marks a departure as ASV’s first growth equity bet.
“We launched our growth equity strategy about six months ago and have been very deliberate,” comments Alex Scherbakovsky, a partner in ASV’s San Francisco office. “With early stage, there are more investments of smaller amounts; growth equity means fewer companies, and bigger checks—each investment counts more, so we must choose very carefully.
The criteria ASV set for growth equity investment included:
- a large-market opportunity;
- a strong management team capable of exploiting such an opportunity;
- differentiated technology suitable for that opportunity; and
- a scalable business model.
“The reason we chose One, Inc. to be our first growth equity investment is because it fit all of those criteria,” Scherbakovsky affirms. “We see One, Inc. as next-generation insurance software. Competitive dynamics have shifted in terms of new products, geographies and how people interact with insurance carriers, so the technology needed to compete has to be different—that’s what we see in One, Inc.”
ASV draws a distinction between One, Inc.’s cloud-built offering and traditional core system vendors that are merely available for delivery through the cloud. “There are fundamental differences between technologies that were developed 10-plus years ago, adapted to the cloud rather than built as a SaaS solution in the first place,” Scherbakovsky comments. “Being architected as a cloud-based solution means that [clients] get access to the latest-and-greatest, as opposed to something built to be on-premise offered as a cloud solution.”
The Elephant in the Insurance Technology Room
One, Inc. positions itself as solving the insurance industry problem of efficiently implementing the kinds of capabilities needed to succeed in today’s market. “The elephant in the insurance technology room is that implementations take multiple years and cost tens of millions of dollars,” comments Chris Ewing, the company’s CEO. “If you’re spending three years doing anything, the whole industry is going to change around you, so you’ll never be able to be innovative and attack markets the way insurers should.”
“The way to do that is to implement modern systems that enable them to integrate and use web-based systems in months rather than years—software rather than services; configuration rathe than development,” Ewing adds. One, Inc. designed its software to provide all applications needed by insurance carriers and MGAs with as little customization as possible, he says.
Stamp of Credibility
One, Inc. will use the new funding on continued expansion of its SaaS platform with an emphasis on faster implementation, according to Ewing. The vendor will add new functionality as well as new lines of business. One, Inc. also seeks to expand into global markets, including Europe, Asia-Pacific and Latin America. “AXA operates in 59 countries globally, so strategically we’ll look at opportunities to expand in those markets,” Ewing says.
In addition to that access, the round of funding from ASV, MassMutual Ventures and H&Q Asia Pacific gives something beyond the cash value and market access, in Ewing’s view. “This gives us a stamp of credibility for creating a software platform of this type that is applicable not only to small- or mid-sized companies, but to the largest companies in the world,” he says.