The vast landscape of the internet continues to grow and evolve continuously. While this presents new opportunities for businesses it also makes it more difficult for companies to distinguish themselves among the vast array of impetuses vying for limited audience attention. In order to succeed, brands must meet customers where they are, aligning with their digital lifestyles, instead of hoping to direct them to where they want them to be. Cover Genius is an insurance provider that allows anyone with a digital presence to embed comprehensive insurance purchase and protection opportunities seamlessly. The company’s signature xCover platform enables merchants to offer insurance and coverage directly at the point of sale during the initial transaction using just an API. Tailored solutions are available for a diverse range of merchant categories including live entertainment ticketing, travel, auto, gig marketplaces, property, payments, logistics, and retail. Operating on a global scale, Cover Genius is licensed to underwrite policies in 60+ countries and in over 40 languages. Claims are handled quickly with instant payments in over 90+ currencies. With xCover, the company has amassed an impressive roster of partners that offer embedded protection to over 30M customers while driving incremental revenue for companies like Booking Holdings, Ryanair, Amazon, eBay, Wayfair, Shopify, and Seat Geek.
AlleyWatch caught up with Cover Genius CEO and Cofounder Angus McDonald to learn more about the business, the company’s strategic plans, latest round of funding, which brings the company’s total funding raised to $245M, and much, much more…
Who were your investors and how much did you raise?
This was a $80M Series E funding round. The round was led by Spark Capital with support from existing investors, including Dawn Capital, King River Capital, and G Squared.
Tell us about the product or service that Cover Genius offers.
Since our inception in 2014, Cover Genius has advanced insurance distribution through our award-winning global distribution platform, XCover. By leveraging AI and data-driven insights, XCover enables merchants to provide a wide range of insurance and other types of protection across various market segments (travel, retail, ticketing, logistics, and more). With a focus on customization, Cover Genius offers both bundled and standalone solutions, resulting in increased conversion rates and enhanced revenues for our merchant partners. By delivering highly relevant protection options at the most suitable prices and times, we ensure customer satisfaction backed by our industry-leading post-claims Net Promoter Score (NPS).
What inspired the start of Cover Genius?
Cover Genius was founded 10 years ago in 2014. My cofounder Chris (Bayley) and I pivoted our online travel business when we witnessed firsthand the challenges of distributing insurance across multiple regions and a clear opportunity to improve the insurance industry with technology. Traditional insurance models were slow, cumbersome, and frustrating for customers. We wanted to create a more efficient, customer-friendly insurance experience so we worked tirelessly to launch XCover a ‘full stack’ platform that enables partners to embed and sell any line of insurance or other type of protection, anywhere in the world. Since then, we’ve collaborated with some of the world’s largest digital companies (Klarna, Spirit Airlines, eBay, and more), expanded our workforce to over 600 employees, and opened offices around the world, including New York, London, Amsterdam, Singapore, and Sydney among others.
How is Cover Genius different?
We are uniquely positioned as an insurtech with global end-to-end capabilities. This means that we can bring a solution to market for a partner, from any industry, who wants to protect its global customer – regardless of their country, language, or currency. We help our merchant partners drive ancillary revenue by protecting more of their end customers and optimizing the booking experience so customers engage with the offer. In contrast, traditional insurance models are often beset with legacy software and/or are monoline, meaning they only work in one industry or only operate in one country.
What market does Cover Genius target and how big is it?
The Embedded Insurance market is forecasted to reach $700B a year by 2030, signifying a massive opportunity to provide customers with personalized and relevant protection solutions where and when they need them most. At Cover Genius, we’ve uniquely differentiated ourselves by providing an end-to-end, global solution that is trusted by some of the world’s largest digital companies such as eBay, Spirit Airlines, and Klarna. We work with merchant partners across industries to co-create bespoke insurance, warranty or other protection solutions. To date, we’ve reached more than 30M end customers and are continuing to grow rapidly as we bring on new global partners.
What’s your business model?
We are genuine partners to our clients and typically earn revenue shares rather than charging for technology licenses. Some of this revenue is subscription-based as retailers move to adopt AppleCare-like solutions.
How are you preparing for a potential economic slowdown?
It’s a testament to the strength of our embedded business model that we raised a significant amount of capital during a broader tech and economic slowdown. The embedded insurance sector has emerged as a more efficient way to distribute insurance and protection products at the right place, at the right time and at the right price. During an economic slowdown, consumers are more conscious of their investments and driven to protect them with insurance or other protection solutions. We work alongside our partners to ensure customers are offered the most relevant protection options, backed by a seamless claims experience with an industry-leading NPS score.
What was the funding process like?
During this round, we welcomed a new investor Spark Capital, a New York-based VC firm recognized for partnering with category-defining technology companies like Twitter, Coinbase, and Slack. Spark has followed us for several years, so it’s exciting to officially welcome them to Cover Genius and have the continued support of our existing investors Dawn Capital, King River Capital and G Squared. This investment underscores Cover Genius’ position as a global leader in the insurtech industry.
What are the biggest challenges that you faced while raising capital?
It can be difficult to raise capital in the insurtech and fintech industries because you need to persuade investors that a new wave of innovation is on the horizon for an industry that’s remained relatively stable for decades or longer. Despite these difficulties, our proven success working with the world’s largest online companies around the world has helped demonstrate our potential to bring about significant changes to the insurtech industry with new, efficient solutions backed by technology, policy innovation, and industry expertise.
What factors about your business led your investors to write the check?
Cover Genius has differentiated itself by embedding insurance and other types of protection into online experiences across industries (travel, ticketing, retail, logistics, fintech, etc.). Our unique ability to create customer-centric protection solutions backed by technology, policy innovation, and industry expertise has led to collaborations with leading brands including Klarna, eBay, Spirit Airlines, etc. In addition, we’ve been able to show investors we’ve maintained sustainable growth as we’ve scaled significantly. In 2023, we achieved an impressive 107% year-on-year growth and maintained a 145% Net Revenue Retention by partnering with some of the world’s largest digital businesses to provide embedded protection to over 30 million customers worldwide.
What are the milestones you plan to achieve in the next six months?
These new funds will drive growth in key markets like travel, retail, ticketing, and logistics. It will also accelerate our investment in cutting-edge technology, including improved digital insurance distribution solutions, deploying AI to assist in claims handling, and expanding the protection solutions available on our XCover platform.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Be aware it’s a tough market out there for investors too. Make sure you have a clear path to profitability and that your unit economics stack up. If you can demonstrate that, investors will be ready and willing to support you.
Where do you see the company going now over the near term?
Our mission is to protect the customers of the world’s largest digital companies and the closure of our Series E funding round marks an important milestone in our journey. These new funds will drive growth in key markets like travel, retail, ticketing, and logistics. It will also accelerate our investment in cutting-edge technology, including improved digital insurance distribution solutions, deploying AI claims to assist in claims handling, and expanding the protection solutions available on our platform.
What’s your favorite summer destination in and around the city?
Governors Island.
