Shepherd Raises $13.5 Million in Series A Funding

The commercial construction industry-focused InsurTech has unveiled Shepherd Compliance AI-powered software available at no charge to customers.

(Image source: Shepherd homepage.)

Shepherd (San Francisco), an insurance tech platform for commercial construction, announced today it raised a $13.5 million Series A funding round led by Costanoa Ventures (Palo Alto, Calif.) with participation from Intact Ventures, Era Ventures, Greenlight Re and Spark Capital. Shepherd combines insurance together with software to help contractors save on premiums. The company will utilize the funds to expand its underwriting and software team, accelerate product development and scale its software offerings.

Justin Levine, CEO, Shepherd.

“There is an urgent need for innovation in the commercial construction insurance industry,” comments Justin Levine, CEO, Shepherd. “Our mission at Shepherd is ambitious but simple: to create the first comprehensive platform that combines top-tier insurance offerings with world-class software to help commercial businesses manage risk and prevent losses.”

Shepherd describes its offering as combining insurance capacity with fast underwriting, risk management software and a construction software marketplace to streamline tedious processes and workflows. The company says its technology-enabled underwriting process has an average response time of 12 hours, which, Shepherd notes, is weeks faster than the rest of the industry.

Shepherd seeks to address the challenges of exploding claim severity, archaic underwriting processes and underutilization of technology in the commercial construction industry, which the company says have threatened to make insurance even more expensive and less sustainable. The InsurTech notes that, between 2010 and 2020, the median personal injury award increased nearly four times, causing carriers to reduce their project underwriting by 40 percent or more. Without radical innovation, the $10 trillion commercial construction industry will eventually become uninsurable, a Shepherd statement warns.

In response to these macro trends, Shepherd reports that it is also rolling out a new software solution, Shepherd Compliance, to streamline and automate vendor compliance reviews, which the InsurTech calls a tedious and error-prone process that is vital for large businesses that need to validate coverage from their downstream vendors on every project. Shepherd Compliance uses artificial intelligence to review PDF-based data and automate the management of all related workflows. The software is optimized for Shepherd policyholders and also integrates with project management platforms, like Procore, ensuring ease of use across existing systems.

Commercial Construction an Overlooked Vertical

Mark Selcow, general partner, Costanoa Ventures.

“Commercial construction is a central and vital driver to the overall economy, yet has been overlooked by technology providers for years,” comments Mark Selcow, general partner, Costanoa Ventures. “High insurance costs and even unavailability of coverage plagues a sector already struggling with tight margins and business risk. The team behind Shepherd is taking a technology-forward approach, developing innovative insurance products that use modern software and data techniques to create a vastly superior insurance offering. Shepherd delivers better priced, better fit policies for clients, thanks to its data and tech advantages.”

In under 18 months, following its founding in 2021, Shepherd reports that it achieved five-fold growth in gross written premium year-over-year and expanded from a single product offering (Excess Liability) to four, encompassing all three primary casualty lines (General Liability, Commercial Auto and Workers’ Compensation).

Shepherd is also appointing Costanoa Ventures’ Mark Selcow to its board as the company looks to accelerate its growth.

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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