Source Code: Your daily look at what matters in tech.

source-codesource codeauthorMike MurphyNoneWant your finger on the pulse of everything that's happening in tech? Sign up to get David Pierce's daily newsletter.64fd3cbe9f
×

Get access to Protocol

Your information will be used in accordance with our Privacy Policy

I’m already a subscriber
People

Startups are risky. Here’s how one company wants to make them less so.

Vouch sells insurance to early-stage startups; now it's aiming for bigger ones, too.

Startups are risky. Here’s how one company wants to make them less so.

Vouch's online insurance portal.

Image: Vouch

It's inherently risky to leave a job, hit friends and family up for cash and found a startup. The overwhelming majority startups fail within their first year — and that's during regular years, not ones where a pandemic has rocked the entire world. There's so many things to think about after you've set up the company, but once you've done all that, what if someone breaks into your office in the middle of the night and steals your brand-new venture-funded laptops?

Insurance probably isn't the first thing that jumps to mind for budding entrepreneurs, and it probably won't come up until there's an issue: an aggrieved co-founder wants to split; an employee slips on a puddle; the database gets hacked — all things that could happen that a company needs coverage for.

"The moment where the insurance conversation takes place is different for each founder," said Sam Hodges, the founder of Vouch, a digital-only insurance company for tech startups. Hodges, who himself is a former investor and co-founder of Funding Circle, said that repeat founders often know to get to it off the bat rather than later in the startup process; they know it's as important as setting up your email or opening a bank account. "First-time founders usually have to be told," he said.

Hodges said most insurers aren't geared toward the operating model of tech startups. "The risks of a restaurant or a retailer are wildly different than a tech company's," Hodges said. Some insurers still rely on paper trails, and a traditional broker might have to come to see your business before writing you a policy.

Hodges' own experience with starting companies led him to realize there was a need for an insurer just for tech. He founded Vouch roughly two years ago, and the company has since expanded its insurance offerings to a total of 22 states, including tech hubs like California and Massachusetts (although not Washington state or New York).

Today, the company is announcing that it's expanding beyond early-stage startups it's served so far to serve companies that have raised series B funding rounds and beyond. It will now insure startups with up to 150 employees that have raised as much as $75 million and have sales volumes of less than $35 million. Essentially, the company is growing to meet the needs of some of its earliest clients as they grow. With this change, Vouch says its services are now available to nearly 80% of U.S. venture-backed startups.

"As a company grows from early stage toward increased maturity, the responsibility to build a risk-averse business increases with more stakeholders involved on all sides," Hodges said in a statement.

Vouch launched its first offerings back in August, taking about a year to set up a system that would work for tech startups. The company now offers nine different types of insurance, including property, liability, cyber coverage and employment practices liability. Vouch's proprietary underwriting platform can build a custom pack of insurance policies for a startup in 10 minutes and have them up and running with the policies in less than a day.

"People are expecting consumer-like experiences in business software more and more," Hodges said, and insurance is no different. Why would a digital-only company that communicates through Slack, manages tasks on Trello and relies on Shopify to sell its products want an insurance system that still requires hard copies mailed on paper? Vouch is partnered with trusted brands in the startup universe, like Silicon Valley Bank and Y Combinator — a far cry from the world of claims adjusters and insurance adjusters. Those two organizations also happen to be great funnels for new clients for Vouch, Hodges said.

Hodges said that COVID-19 so far has had limited impact on Vouch's business, as many of the company's clients are able to work remotely. "Companies are still getting formed in this moment," Hodges said. But new challenges will likely arise as a result of the pandemic. And while some legal issues, especially those surrounding the physical office, are on the back burner for some new startups, others — like those around data security in an all-virtual world — are on the rise.

While the road ahead for many startups is still uncertain, as it is for much of the world, Hodges said he hopes Vouch can continue to evolve as the startup landscape does. "It has always been critical for businesses and technology companies to manage risk responsibly — and arguably now more than ever before," he said.

Does Elon Musk make Tesla tech?

Between the massive valuation and the self-driving software, Tesla isn't hard to sell as a tech company. But does that mean that, in 10 years, every car will be tech?

You know what's not tech and is a car company? Volkswagen.

Image: Tesla/Protocol

From disagreements about what "Autopilot" should mean and SolarCity lawsuits to space colonization and Boring Company tunnels, extremely online Tesla CEO Elon Musk and his company stay firmly in the news, giving us all plenty of opportunities to consider whether the company that made electric cars cool counts as tech.

The massive valuation definitely screams tech, as does the company's investment in self-driving software and battery development. But at the end of the day, this might not be enough to convince skeptics that Tesla is anything other than a car company that uses tech. It also raises questions about the role that timeliness plays in calling something tech. In a potential future where EVs are the norm and many run on Tesla's own software — which is well within the realm of possibility — will Tesla lose its claim to a tech pedigree?

Keep Reading Show less
Becca Evans
Becca Evans is a copy editor and producer at Protocol. Previously she edited Carrie Ann Conversations, a wellness and lifestyle publication founded by Carrie Ann Inaba. She's also written for STYLECASTER. Becca lives in Los Angeles.

As President of Alibaba Group, I am often asked, "What is Alibaba doing in the U.S.?"

In fact, most people are not aware we have a business in the U.S. because we are not a U.S. consumer-facing service that people use every day – nor do we want to be. Our consumers – nearly 900 million of them – are located in China.

Keep Reading Show less
J. Michael Evans
Michael Evans leads and executes Alibaba Group's international strategy for globalizing the company and expanding its businesses outside of China.
Protocol | Workplace

Apple isn’t the only tech company spooked by the delta variant

Spooked by rising cases of COVID-19, many tech companies delay their office reopening.

Apple and at least two other Silicon Valley companies have decided to delay their reopenings in response to rising COVID-19 case counts.

Photo: Luis Alvarez via Getty

Apple grabbed headlines this week when it told employees it would delay its office reopening until October or later. But the iPhone maker wasn't alone: At least two other Silicon Valley companies decided to delay their reopenings last week in response to rising COVID-19 case counts.

Both ServiceNow and Pure Storage opted to push back their September return-to-office dates last week, telling employees they can work remotely until at least the end of the year. Other companies may decide to exercise more caution given the current trends.

Keep Reading Show less
Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.
Protocol | Workplace

Half of working parents have felt discriminated against during COVID

A new survey found that working parents at the VP level are more likely to say they've faced discrimination at work than their lower-level counterparts.

A new survey looks at discrimination faced by working parents during the pandemic.

Photo: d3sign/Getty Images

The toll COVID-19 has taken on working parents — particularly working moms — is, by now, well-documented. The impact for parents in low-wage jobs has been particularly devastating.

But a new survey, shared exclusively with Protocol, finds that among parents who kept their jobs through the pandemic, people who hold more senior positions are actually more likely to say they faced discrimination at work than their lower-level colleagues.

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

Protocol | Enterprise

Alphabet goes deep into industrial robotic software with Intrinsic

If it succeeds, the gambit could help support Google Cloud's lofty ambitions in the manufacturing sector.

Alphabet is aiming to make advanced robotic technology affordable to customers.

Photo: Getty Images

Alphabet launched a new division Friday called Intrinsic, which will focus on building software for industrial robots, per a blog post. The move plunges the tech giant deeper into a sector that's in the midst of a major wave of digitization.

The goal of Intrinsic is to "give industrial robots the ability to sense, learn, and automatically make adjustments as they're completing tasks, so they work in a wider range of settings and applications," CEO Wendy Tan-White wrote in the post.

Keep Reading Show less
Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Latest Stories