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The investment brings The Zebra’s total raised to $101.5 million since its 2012 inception. The Austin-based company last raised $40 million in an Accel-led Series B in September 2017. As part of that funding round, Accel and The Zebra tapped Keith Melnick, former president of travel metasearch engine Kayak as its new CEO.
“We like to think of The Zebra as the ‘Kayak of Insurance,’” Melnick told me. “We’re basically creating a virtual insurance agency.”
The Zebra started out as a comparison site for people looking for auto insurance. And it’s partners with nine of the 10 top auto insurance carriers in the U.S. Over time, it’s also “naturally” evolved to offer homeowners insurance with the goal of eventually branching out into renters and life insurance.
“Ultimately, as people evolve through their insurance needs, we can be there for them,” said Melnick, who invested in the company’s Series B and C rounds.
Meanwhile, the company says it did not intentionally raise less in its Series C than its Series B but instead aimed to raise just what it needed to keep up with its momentum. (For more on companies that are not trying to grow at all costs, read my story on the increased focus on profitability here.) Also, to read about another company that also took that approach (raising less in its Series C than B), head here.
How it works
The Zebra offers a real-time quote tool that compares more than 100 insurance companies.
Despite being an online company, The Zebra prides itself on offering customer service help via telephone as well in acknowledgement of how “complicated” of a product insurance is.
“If someone gets stuck, we have licensed insurance agents in all 50 states that can talk to them,” he said. “We want to make it as easy and as transparent as possible.” Or, just like a zebra, more “black and white.”
After Melnick joined, The Zebra killed off the lead generation side of its business, going as far as to eliminate any requirements for a user’s phone number to protect the privacy of its users. It also revamped its mobile and desktop platforms. Its headcount has surged from about 50-60 people to close to 200 across its offices in Austin and New York. It also works with a team of developers in Lagos, Nigeria.
“We invested a ton in product management and engineering and became really user-focused,” Melnick said. “We’ve also developed much deeper relationships with carriers.”
The company’s efforts seem to be paying off in the way of growth. The Zebra is that rare transparent startup that actually divulges revenue figures. Last year, Melnick said, the startup saw its revenue surge by nearly 200 percent year over year to nearly $37 million in 2019. The company also says it ended the year with a revenue run rate approaching $60 million, “more than half of which was driven by users coming organically to The Zebra’s website.” Melnick projects revenue to grow “well over” 100 percent in 2020.
The flexibility of The Zebra’s model means it’s “agnostic to a carrier’s business model” Melnick said.
“We can refer people to agencies such as State Farm or Allstate or we can also work with direct insurance agencies like Travelers or insurtech startups such as Metromile,” he added. “We can offer a bigger breadth of product than most places.”
Looking ahead, the startup plans to increase its use of machine learning “to better serve customers and bind more policies in-house.” It also plans to add more customization so it can serve a wider audience.
For Accel Partner John Locke, The Zebra is “the most interesting company in insurtech” and one of the fastest-growing consumer businesses his firm works with globally. Also, Accel believes insurance is one of the most interesting consumer markets in general in tech right now.
“It’s the largest consumer market yet to shift digital,” he said. In fact, he points out that the auto insurance market in the U.S. is expected to reach over $288 billion this year with just an estimated 20.7 percent of insurance being purchased online.
“We believe over the next 5 years that will flip to 80/20 digital (versus the other way around), just like all other major consumer markets such as banking and travel,” Locke added.
He believes old-line carriers realize that consumers want to engage online, so will spend more money acquiring customers digitally versus via agents. Locke also believes there’s a “terrific amount of startup energy in the market and very talented entrepreneurs building new, fully digital ‘carriers’ like Root in auto, Lemonade in renters and Ethos (another Accel company) in life insurance.”
For his part, Silverton Partners’ General Partner Morgan Flager has been impressed with The Zebra’s ability to aggressively scale its business “while maintaining a vibrant culture and identity.”
“They’ve grown revenue and headcount quickly, while maintaining their status as one of Austin’s best places to work because they have stayed true to their values and purpose,” he added.
Note: This story was revised post-publication to change Accel Partners to Accel.
Blog Roll Illustration: Li-Anne Dias