Extend is out to make the next extended warranty you buy be one that’s easy to obtain, easy to understand, and easy to make a claim.
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The San Francisco-based company raised $40 million in Series B funding led by Meritech Capital, with participation from PayPal Ventures, as well as existing investors GreatPoint Ventures and Shah Capital Partners. With the new funding, Extend has raised a total of $56 million since its inception in February 2019. That amount includes a $12.5 million Series A announced in November 2019, Woodrow Levin, co-founder and CEO, told Crunchbase News.
Extend interacts with consumers at their point of purchase, providing an application programming interface that enables any merchant to offer extended warranties. It also integrates with e-commerce platforms and manages the functions of a call center. In addition, it provides merchants with a new revenue stream and gives customers greater peace of mind when making purchase decisions, Levin said.
“Legacy providers make it difficult to file claims: You either have to have a copy of the receipt or you have to call someone,” he said. “Instead, we said let’s use technology to make this super easy.”
Kaley, Extend’s “super bot” is able to adjudicate 98 percent of claims in under 45 seconds. The customer texts with Kaley, which asks for certain identifying information to verify the warranty holder, and 90 percent of the time the result is an approved claim, he added.
Levin intends to use the new funding to continue to develop Extend’s platform, build out new features and hire within the software development and sales teams. He is also looking at new partnerships across new verticals, such as consumer electronics, sports and fitness equipment, and auto parts.
The company has 90 employees currently, and Levin expects that to grow to 200 by the end of next year.
“We are able to drive incremental revenue from extended warranties and help to bridge the gap between small and large merchants,” he said. “This is the new age of the e-commerce stack, where there is same-day delivery and extended warranties. At the end of the day, the focus is on building an elegant, transparent customer experience from start to finish.”
The U.S. extended warranty market brings in $50 billion a year in annual premiums, but 99 percent of the market is not being served today, Levin said. That unlocks another $40 billion in annual premiums, which is a huge market opportunity for Extend to go after, he added.
In just 19 months, the company was able to secure partnerships with more than 150 merchants, including Peloton, iRobot, Harman/JBL, Advance Auto Parts and Traeger Grills. The company also continues to gain traction with customers at a 12 percent capture rate versus the industry standard of approximately 5 percent, Levin said.
What investors have to say
Jay Ganatra, partner at PayPal Ventures, said via email that the firm is interested in the extended warranty space, feeling it is “ripe for innovation and an upgrade,” especially as consumer expectations have changed.
“Extend really caught our eye because of its customer experience,” he added. “The whole thing is done digitally in seconds and without needing a receipt or to pick up the phone. We believe that Extend’s consumer experience will forever change how consumers think about extended warranties and turn the legacy claims process into something that’s fast, easy and enjoyable.”
Meanwhile, Alex Clayton, general partner at Meritech Capital, said in an interview that his firm focuses on investing in market leaders. He went to college with another of Extend’s co-founders, Rohan Shah, and liked the company’s early customer wins.
He also sees additional potential for Extend, given this year, the U.S. e-commerce market is up 25 percent to $4 trillion.
“Amazon accounts for 30 or 40 percent of that, so there are many billions of dollars in potential revenue,” Clayton said. “The top retailers are doing extended warranties, but the top 10 to 1,000 have been largely ignored, so the opportunity is quite large.”
Platform photo courtesy of Extend
Illustration: Li-Anne Dias