Rainbow, a digital managing general underwriter specialising in small business insurance, has recently secured a significant $12 million in seed funding.
According to FinTech Finance, this funding round saw the participation of notable investors including Caffeinated Capital, Altai Ventures, Zigg Capital, 8VC, Buckley Ventures, Habitat Partners, and Arch Capital Group Ltd.
This substantial investment underscores Rainbow’s unique approach to small business insurance. The company, spearheaded by a team of experienced entrepreneurs, focuses on launching insurance programs in specific industry verticals, leveraging data and technology to gain an underwriting edge. Their flagship offering, a business owner’s policy (BOP) product, is designed specifically for the restaurant sector. Already operational in eight states, Rainbow aims to expand its reach to over 25 states by 2024. Their product is distributed exclusively through independent insurance agents and digital partners, offering a specialised option particularly for the restaurant industry, a sector experiencing reduced interest from major carriers.
Rainbow intends to use the new funds to further develop its tailored insurance solutions and expand its offerings. With a strong focus on the restaurant industry, the company plans to build deep domain expertise in selected verticals. This strategy allows Rainbow to fine-tune its underwriting processes, prioritising loss ratio while maintaining a customer-centric approach.
“We saw a gap in the process of other underwriting companies and carriers focused on small commercial, particularly with restaurants. By building deep domain expertise, we can tailor our underwriting and prioritize loss ratio, all while maintaining a customer-centric approach,” explained Rainbow’s CEO and co-founder Bobby Touran.
Rainbow’s engineering team has developed a proprietary, scalable platform for underwriting and risk assessment. This platform intertwines data and technology in its underwriting process, providing value to both agents and insureds. It rewards policyholders with prudent operations and streamlines the placement of accounts for agents, focusing on loss performance.
Supporting investors have expressed confidence in Rainbow’s vision and capabilities. “We are deeply invested in Rainbow and its world-class founding team. Their exceptional platform capabilities have them poised to scale rapidly,” said Ray Tonsing, Managing Partner of Caffeinated Capital.
Further emphasising the potential of Rainbow’s approach, Oleg Ilichev, Managing Partner of Altai Ventures, highlighted the importance of customer centricity and vertical depth in generating outsized underwriting returns. Rainbow’s vision extends beyond the foodservice industry, with plans to introduce specialised programs in additional business verticals.
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