When Itai Ben-Zaken’s first startup failed in 2018, the former BCG consultant and Wharton MBA spent months trying to know what he could have done in another way during the five years he ran the company.
After reviewing most of his major decisions, he concluded that while Comprendi, the digital ad suggestion company, was an interesting proposition, its biggest mistake was attempting to operate in a market with two dominant players: Google and Facebook.
So when Ben-Zaken began considering about starting his second startup, he vowed to not make the same mistake again. He wanted to begin a business in a market divided among many competitors, and ultimately decided to build a company offering property and casualty insurance to landlords and condominium associations.
The largest carrier in renters’ insurance – Travelers — represented only about 7% of the market, with the remainder of the competitive landscape spread among 100 smaller vendors, Ben-Zaken told TechCrunch.
Ben-Zaken was no stranger to insurance. Before founding Comprendi, he ran Insurance.com for 4 years at QuinStreet, an operator of economic services markets under its own brand.
Started Honeycomb insurance in 2019 and after two years of building the company’s computer vision and AI-based real estate “inspection” technology, the company sold its first policy in 2021. Ben-Zaken says Honeycomb’s AI relies on aerial photos of building roofs, often eliminating the need for costly physical inspections.
The company raised $15 million in Series A funding in early 2022 and is currently on track to sell $130 million in insurance premiums in 2024, a three-fold increase from last yr.
When Honeycomb was preparing to boost its Series B earlier this yr, one of the first calls Ben-Zaken made was to individual enterprise capitalist Oren Zeev, known for being one of the largest shareholders of Navan, Houzz, Next Insurance and Tipalti.
“I was amazed by what I saw,” Zeev said of Honeycomb. He agreed to back Honeycomb, but only if Ben-Zaken agreed not to advertise the deal to other investors.
Ben-Zaken didn’t think twice about Zeev’s proposal: ever since he founded the company, he had dreamed of getting a solo VC as his backer and serving on Honeycomb’s board.
Zeev wrote a check for $30 million to Honeycomb, making him the company’s largest shareholder. Other participants in the $36 million Series B that the Chicago startup is announcing on Tuesday include recent investors Arkin Holdings and Launchbay Capital and returning backers Ibex Investors, Phoenix Insurance and IT-Farm.
Zeev is also no stranger to the insurtech space – he holds a large stake in Next Insurance and supported Hippo Insurance ahead of the sector in 2021.
“I wasn’t looking for another insurance investment,” he told TechCrunch. “The bar is very high because I am aware of the challenges.”
In addition to the company’s rapid growth, what attracted Zeev to Honeycomb was the incontrovertible fact that owner insurance is a “sleepy” industry ripe for innovation, but also that the sector is not large enough for insurance giants to need to pursue it. In other words, Zeev is not fearful about major players moving into Honeycomb territory, as was the case with Ben-Zaken’s first startup.
According to Ben-Zaken, the homeowner and condo association insurance market stays highly fragmented. He says there are two startups operating on the market: Constantwhich raised a $28.5 million Series B round last July, and Obie, which closed a $25.5 million Series B round from Battery Ventures a yr ago.
Honeycomb will use the recent funding to double its workforce from 90 to 180 employees over the next 18 months, introduce recent products and expand its offering into recent markets.
“We plan to expand beyond landlord insurance,” said Ben Zaken, adding that his company’s goal is to supply comprehensive business property insurance services.