Tag Archives: Limelight Health

How to Boost Chance of Being Acquired

There is an ever-growing push for the insurance industry to modernize, and today’s carriers are looking to find more innovative ways to do business. As an insurtech founder, you are the innovator. The products that insurtech startups offer are becoming highly sought-after by carriers, private equity firms, investors and incumbents alike. So how can you take advantage of this unique position and move your company toward an acquisition opportunity? 

As co-founder and CEO of Limelight Health, an insurtech startup offering core system sales, rating and underwriting SaaS solutions for group insurance carriers, I grew our company to eventually be acquired by FINEOS, the global market leader in core systems for life, accident and health insurance. If you’re looking to do the same, here are three key lessons I learned along the way to help increase your company’s chances of being acquired.

1. Know Where You’re Going but Remain Flexible

Early on, I wish we’d had more clarity on the Limelight Health strategy and the goals we were working toward. In hindsight, I would have spent more time building out our strategy and developing a clear vision before we did anything else. But what we did well was pivot and adjust as we learned. As Mike Tyson said, “Everybody has a plan until they get punched in the mouth.”

Your journey toward acquisition will be much smoother if you know where you’re headed from the beginning. But even with this goal in mind, you shouldn’t necessarily grow your company simply for the purpose of being acquired. You should aim to grow your company to be a strong, solid business regardless of what may happen in the future. 

Focus on increasing your revenue, developing your tech stack and bringing on a stellar team to help build your company for the long term. This way, your company will thrive whether you get acquired, go public or continue as a growing and sustainable business. 

2. Build Relationships

Taking the time to make sure you’re aware of what’s going on in the market, and meeting other players in the space can be a game changer for your company. And this should include your competitors.

Oftentimes people shy away from knowing their competitors, connecting or partnering with them. But the majority of the time, it will be a competitor that eventually acquires you. If you don’t know who they are (and vice versa) and haven’t built a relationship there, you could miss out on a great opportunity. 

See also: How AI Powers Customer Contacts

By constantly building relationships in your market, you will greatly increase your chances of being acquired. You never know where a new connection could lead you, so start reaching out and working on those relationships early on. If you look back to the late ’90s, when Steve Jobs came back to take over Apple and the company was in big trouble, it was Microsoft, Apple’s biggest competitor, that sent the company a $150 million lifeline.

3. Identify Strengths and Weaknesses

The earlier you can begin to identify which areas your company excels in and which may need some extra attention, the better off you’ll be. By playing to your strengths and improving weak areas, you’ll build a more solid company all around, making you a more appealing candidate for acquisition. 

Have conversations with analyst firms,  M&A banks, investors, partners and competitors early on, and ask for their feedback on what your company’s strengths and weaknesses may be. Get their input on how you can strategically move your business forward with this knowledge, and strengthen your position in the market. 

Just as important as knowing your own strengths and weaknesses is knowing those of your competitors. Remember when I said you need to know your competitors? This is a big part of the reason why. If your company has a strong point in an area of weakness for a competitor, you can use this to leverage your business as the most appealing option in your space for M&A opportunities. Or, if a competitor is acquiring you, knowing their weak points will help you make a solid case for why they need your company to strengthen their own. 

See also: Innovation Comes to Risk Engineering

A Few Tips for Approaching the Acquisition Phase 

So you’ve worked through all of the points above and have built a strong and profitable business. You’re about to begin the early phases of having your business acquired by a solid prospect. Now what? 

As you move toward closing the acquisition deal, here are a few tips on how to lead your company through the process.

  1. Don’t underestimate the amount of work and distraction the acquisition process will bring to focusing on business operations. 
  2. Only bring appropriate staff into the acquisition conversation as needed until you’re certain you have a deal.
  3. Once you know the deal is done, develop a clear transition plan with your team and take the time to listen to how your employees are feeling. At Limelight Health, one effort we are doing along these lines is hosting a virtual benefit concert to “sunset” our brand and commemorate what we’ve built together.

InsurTech Start-Ups: Friends or Foes?

This is the second of two parts. The first was, “The InsurTech Boom Is Reshaping the Market.”

What is your strategy to respond to Insurtech? Yes, InsurTech start-ups may be rivals and disruptors….but savvy insurers are starting to recognize that InsurTech start-ups can also be partners. The benefits of InsurTech collaboration are substantial.

While some carriers view the rise of insurance technology start-ups with trepidation, others have been quick to seize on the InsurTech trend as an opportunity. Major insurers are some of the biggest investors in fledgling InsurIech firms. Far from seeing these new companies as rivals, they’re embracing them as partners.

The venture investment funds of prominent insurers such as AXA, Aviva, Allianz, American Family, MassMutual, TransAmerica and Ping An, have made significant investments in insurtech start-ups. Recipients include PolicyGenius, NextCapital, CoverHound and Limelight Health.

Funding of emerging technology firms by big insurers looks set to climb this year. CB Insights reports that insurers completed 20 investment deals in the first quarter of this year. The same group of insurers concluded only eight deals in the first three months of 2015.

See also: A Mental Framework for InsurTech

The shift to collaborate, rather than compete, with technology start-ups is gathering pace throughout the financial services industry. Investment in start-ups aiming to collaborate with established financial services providers jumped 138% last year. It accounted for 44% of the total funding for financial services technology, FinTech, in 2015 – up from 29% in 2014.

Start-ups looking to compete with financial services companies still attract the bulk of investment. However, there’s growing enthusiasm for cooperation among investors and start-ups. The extent of this support varies across geographic markets. In New York, investment in collaborative start-ups accounted for 83% of total FinTech funding, while in London and the rest of the U.K., where the regulatory environment is more conducive to new competitors, the proportion was only 10%.

The illustration below shows the growing interest in cooperation across the financial services industry. Investors are increasingly supporting firms that can help established service providers reduce costs and risk and capitalize on new markets.

Friend or foe. Big insurers shift stance on insurtech start-ups_Cusano (Figure 1)

This trend is only beginning to affect the insurance industry. But as the InsurTech sector grows it will become much stronger.

Increasing cooperation between insurers and new technology firms is a sure sign of the growing maturity of the InsurTech sector. Many major carriers no longer worry that InsurTech firms might erode their business. Instead, they’re eager to benefit from the new insights, attitudes and technology they bring to the industry.

See also: Blockchain Technology and Insurance  

The benefits of collaborating with InsurTech firms can be compelling and include:

  • Insurers can get early access, first mover advantage on disruptive technologies.
  • Big insurers’ decisions to use new technologies often decide whether a new company will be successful….so combining use of a new InsurTech with an investment is a double win.
  • Insurers will get the ability to influence the strategy of the new start-up.

In my next blog post, I’ll discuss the shift in FinTech funding to developing economies and explain why this is good for insurers.

This article originally appeared on Accenture.

 

What Limelight Shows on InsurTech’s Future

Limelight Health, the winner of our start-up Showcase at our first Insurance Disrupted | Silicon Valley, gives a sense of what’s to come with innovation in insurance.

Limelight Health has a product called QuotePad, which is one of the first real-time, mobile, all-in-one quoting platforms for health insurance and benefits professionals. (The others highlighted at the Showcase are RigGroupHubroostJumpstart RecoveryZenehomeSureify.)

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Jason Andrew, CEO of Limelight, says what his company is doing is a harbinger of even bigger changes: “We are witnessing one of the largest transformations in the history of a multitrillion-dollar industry. New technology is changing the game for the entire insurance ecosystem. Quicker, more seamless data integration is changing the insurance process, from the way consumers research and purchase insurance to how claims are underwritten. As a result, companies large and small are sprinting to keep up with the demand for agile and integrated technology platforms that can harness this growing data volume and extract real value from it.  The largest carriers are now paying attention to big data, spending more money on research and bringing on data scientists to analyze and shape the future of insurance. “

As the industry moves from a legacy framework to a series of more connected systems with intelligent logic built in, all parties involved in the selling and decision-making process will be allowed to spend more time executing decisions and much less time on the administrative work that is a large and protracted part of the process today.

Andrew says, “For the health insurance market, which is fragmented with a lot of outdated systems that don’t connect or communicate easily, and where redundancy often leads to a high probability of error, we see this as being where QuotePad will make a significant impact on the insurance industry.”

Limelight Health was born in February 2014. Before that, the insurance technology boom had not fully launched, and it took several years of pitching, partnering and persistence to gain the attention of an industry that now supports the cause. Prior to 2014, no one was really interested in investing in insurance.

What we now know as #insuretech and #fintech was not the sexy vertical it is today. And we’re just getting started.

If you’re in the industry you are probably keenly aware of some of the changes that are coming, but not all. Please consider joining us for future Insurance Disrupted conferences, with our start-up Showcases. The next will be held March 22-23 in Silicon Valley. ITL readers receive a 15% discount here.

Organizer and host of Insurance Disrupted Conference: Silicon Valley Insurance Accelerator – SVIA

Innovation Partner: Insurance Thought Leadership

Conference sponsors: Aflac, Munich RE, Captricity, Zendrive, XL Innovate, Saama Technologies, CRC Insurance Brokers, Novarica

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