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"[The disruptors] often were not insurance startups to start with. They were cross-sector entrepreneurs wanting to solve the world's problems. They just had to see that data proposition and how, with it, they could revolutionize insurance in different ways."
Sabine VanderLinden is the CEO and co-founder of Alchemy Crew, an InsurTech-focused venture validation co-creation studio that launched in June 2020. Alongside corporate partners, Alchemy Crew works on fast-solving major industry problems by de-risking the validation and commercialization of tech ventures.
Sabine has been working at the intersection of insurance and innovation for most of her career. Prior to launching Alchemy Crew, Sabine spent five years as the CEO of Startupbootcamp InsurTech, Europe’s largest InsurTech accelerator, and of InsurTech Hub in Hartford, Connecticut. Her focus has been on finding global ventures and connecting them to investors and corporate partners who need innovative solutions to emerging problems. Through those accelerators, she has backed 70 ventures with the support of over 30 insurers and 100s of investors. She co-edited with three other experts the book on InsurTech—The InsurTech Book.
Alchemy Crew works to make the venture process faster, more robust, and less risky by matching corporate partners with production-ready startups and growth ventures in a highly structured program. Areas of particular focus include emerging risk categories and the opportunities that exist in health, wellness, climate, and sustainability.
In our conversation, we cover:
- Identifying adjacent InsurTech startups – those that offer useful tools or data propositions for the insurance industry
- How solving for specific problems drives investment
- The connections between InsurTech and other industries
- Where she looks for talent
- What legacy insurers are getting right and wrong about innovation
Enjoy!
Can you introduce yourself and tell us about Alchemy Crew?
I'm Sabine VanderLinden––I launched Alchemy Crew in June of 2020 with my industry friends Dan White and Minh Tran. Dan is renowned for his innovation work in insurance. And Minh Tran is renowned for supporting the investment of early and late-stage ventures—he was one of the early general partners at AXA and left to work on his own projects. We’ve known each other for a long time, largely because I set up Startupbootcamp InsurTech and InsurTech Hub in Hartford.
Startupbootcamp InsurTech was a European initiative located in London, and Hartford‘s InsurTech Hub was a U.S. initiative located in Connecticut. Through those two initiatives, my team and I were sourcing startups for corporate insurers and helping them identify and discover ventures they would want to work with primarily through partnerships.
My role with Alchemy Crew is bringing the acceleration, incubation, partnership models to the next level within the insurance industry. I bring that ability to innovate and to transform a business model by unpacking a strategic imperative and aligning venture solutions that would be suited for partnership, but also for investment and acquisition.
Are you solely focused on insurance at Alchemy Crew?
Insurance is our core. I have 20 years of experience in insurance—Minh has 30 years, Dan has around the same amount of years as I do. Our relationships and our integrity, the trust we get in the market, comes from the insurance industry. However, I also have been working with banks during the past five years. So I would say financial services with a strong focus on insurance. Health, life, and property and casualty are our strengths across the board.
When you look at financial institutions you would expect asset management practices, wealth management practices to come together—so there's a linkage between insurance, pensions, and the life angle, which brings us into the banking side.
Is insurance your core just because that's how your backgrounds align? Or do you believe there's going to be something big in the future of insurance?
Insurance touches absolutely everything—that's what makes it super interesting. I started my career in insurance, at Lloyd's of London. I fell into insurance like many other practitioners, and to get out of it is very hard because the strategies and operations are fascinating, people are really nice, and because you develop these unique relationships, which are at the core of the way business is done. At least it had been for a long time. I like this relationship-based approach. Before Covid, we had these special face-to-face interactions with people to actually build things. We now have to operate remotely.
Over the past five years, one thing I've also realized is that insurance is fun, insurance can be sexy. With digital, you can actually make insurance really interesting. So I believe that insurance is probably one of the most interesting places to innovate today. Many insurers are doing a lot of things, but a lot of them are not doing anything too. You have the early adopters, you have the fast followers, and you have the laggards. There's so much more which can be done, from simple personal lines to complex commercial lines. Some of the stuff makes your brain hurt sometimes.
The linkage between insurance and other sectors forces you to go into other industries, like transport and mobility for instance. It forces you to go into health and wellness too. It forces you to go and look at energy or pharma, which is where I'm looking into right now. It forces you to look at the whole value chain and actually see how insurance can evaluate new risk types and mitigate those risks in so many different ways.
You were an investor at Startupbootcamp for numerous years in the InsurTech space. I would love to hear about your time there.
My program, Startupbootcamp InsurTech, took 6% equity in every venture that came into the UK accelerator, and that equity was based on the mini-fund that was supported by a number of VCs and insurers. Through our selection process, we would welcome 10 to 12 ventures into a cohort, or an accelerator every year.
My cycle was a one-year cycle, where we'd be scouting globally for startup ventures for four months and accelerate them for three months. So during my five years there, we sourced around 15,000, 16,000 ventures. The first year we identified 1,300 startups, but the last year we were able to identify 4,500 startups. The accelerator was always focused on the problems we were solving for the insurer. I remember seeing some articles about my work in 2018 and 2019 where people said, “Oh, you know, in Sabine’s programs there are a lot of startups which are not InsurTech. What are they doing there?”
I think it's very important to remember that I had an investor and I had a partner. And both of them wanted to find specific things within our deal-flows that were relevant to them.
There are ventures which can drive financial returns and those that produce strategic returns. One of the things I realized very quickly is that it's not always easy to reconcile the two. As an investor, you need to find options, or ventures, which are investable, but for a corporate venture partner, you must identify partnership opportunities. And so we needed to always address that dichotomy between something which would be high return for the investor and those that could go into discovery, experiment, partnership, which may be a longer process and may require for the venture to change their proposition to fulfill the need of a partner, the partnership bit of the equation.
As you said, there's both the financial return aspect of making decisions, but then also the strategic return. When evaluating opportunities, how do you balance the two, what we'll call the disruptors versus the enablers?
So when you’re talking about Startupbootcamp, it is important to understand that you have the startup on one side, corporates on another side, and then investors, so it’s a three-sided marketplace. You start with finding the partners because if you cannot find the partners, then you cannot potentially find investment.
Our focus was on B2B startups. I rarely went for B2C because B2C would rarely work with a corporate. If I had a B2B2C, it would be to enable an insurer to actually access a market, access new customer segments, or underserved market segments.
That means your choices are actually framed and limited and constrained by problems that need to be solved for the corporate first. I would have a problem statement presented to me, and from that problem statement, my team and I would go globally to find ventures that would solve for this specific problem. Whether somebody wants to solve for claims, someone else wants to solve for call center ops, we find the solutions. This is where for instance portfolio startups such as Spixii, RozieAi or Emerge Analytics did very well.
Then within that portfolio, you try to find maybe the B2B2C or the bigger opportunities which may become disruptors. I remember when Buzzmove came into the cohort, some insurers said, “Why have you selected this venture?” The venture went on to become one of the key UK startups working with many creative partners to actually provide insurance in real-time, such as insurance for gadgets, and renter and home insurance as well. What we also learned through that process is that when you’re monetizing insurance, you also need to have a customer who is ready for that too!
We also touched things like farming. We had a startup called Aerobotics, which is now expanding to Silicon Valley. They collect data using drones. We thought this could be super useful if you could analyze a farm and enable the farmer to have a better insight into their crops. Let’s say for an orchard, if you had the data pinpointed down to the tree level, then the insurer would know which claims they should and should not be paying. This was pretty revolutionary to think about, five years ago.
When you look at my disruptors, they are actually startups, and no one realized that they could become big players. They often were not insurance startups to start with. You just had to see the data proposition and how, with that data proposition, you could revolutionize insurance in different ways.
Insurance is a mature industry, it has a reputation for being slow-moving. Is it hard to find young people who want to shake the industry up?
When I was doing the accelerator work, the average age of my entrepreneurs was 40. I absolutely loved to put the number out there because insurers would see startups as those young kids coming out of business school wanting to be entrepreneurs. What I realized is that actually a lot of those professionals were mature entrepreneurs, people who had already potentially built businesses. What they were looking for is independence, freedom, and the mindset to build something they believed in, often because they had experienced some level of negativity around insurance, and they wanted to solve that problem. Often those gentlemen and ladies are seasoned professionals, and not young kids just coming out of business school.
So how do you go looking for entrepreneurs?
My team constantly scouts globally for real-innovation. They build relationships with specific tech hubs which tell you when there are new InsurTechs emerging, which may not appear in any database. These may include FinTechs too with an idea that could be suitable for insurance. Then when considering access to talent, we were often approached by business schools when we were running the accelerator, as well as universities that wanted to actually provide us with talent, so students could actually practice what they learned during their studies. We used to organize fairs to enable entrepreneurial talent to just come and meet with the startups. Then they could be part of the team for the three months of the acceleration process, to sit down with the startup and actually learn practical knowledge around how you build a sustainable business model. Then, of course, people also reach out through LinkedIn.
I think it’s pretty fun to talk about big legacy insurers. Do you think there are any insurance companies out there that are doing innovation well?
This is a hard question because I think innovation has just started in insurance. We have done less than 1 percent of what could be delivered within the sector. Whilst I think you have amazing insurance businesses that have stepped up to the challenge and are doing absolutely amazing things, there is certainly lots more that can be done. Look at the three pillars of innovation we have been talking about through this discussion––venture validation and partnerships, investing and acquiring, and venture building––some incumbents have embraced all three, and others have been doing better than others at those.
So for example, if you look at insurance carriers some are better equipped for augmenting their processes through partnerships. For others, the key evaluation criteria required to make such choices are not there. What you find is that carriers can scout, identify, and get approached by startups, but they eventually realize that the startups can’t always adequately solve their specific problems. This means that they then identify and look for volumes of new solutions, but this is still done randomly. When you start looking at it as investors, very few are really investing right now. Because of the need to fulfill shareholders’ financial returns and de-risk their portfolio, a lot of investors demand fast returns. I don't think you can warrant fast returns, even for an InsurTech if it cannot become a carrier itself. Vendors know that it often takes 12 months to secure a deal in insurance. This also means that the length of time of the realization of value is much longer.
I think incumbents are underperforming on the venture building side. I think you will see people who have done it well, people who have done it badly, and people who don’t realize that to do venture building, you need to probably take people from outside the sector rather than use people from within. As noted, I think we have done 1% of what can be done leveraging emerging technologies. So bravo to those who are doing great things, but there is 99% more to be done in the years to come.
Do you think there are any key mistakes that legacy insurers make when it comes to innovation?
You don't have a choice as an insurer, because you're regulated, you're holding on to your legacy, your core system, which in many cases was built in the 1970s when everybody went into automation and standardization.
What I see is that they need far more flexibility from a technology viewpoint, from the office of the CIO or the office of the CTO, around creating rules and procedures, codes of conduct to enable quicker innovation. I respect the fact you have the privacy, the security, and all the things which need to take place within IT. But this is what often delays one’s ability to innovate.
The other option is to create a sandbox to allow all the players to be more agile when collaborating with ventures. Everybody's now looking at cloud infrastructure a bit more and creating environments that allow employees to work from home while giving them access to key data sources. So maybe there will be a great impetus to actually think about innovation as well in different ways. You still see things that could move super fast being slowed down, because of legacy constraints. Both because of technological constraints but also institutional fear.
What can you tell us about the process of writing “The InsurTech Book”?
We felt that there was nothing around InsurTech to actually educate young entrepreneurs wanting to go into insurance. So we thought, “Okay, why not write something useful and practical?” And so myself, Susanne Chishti, Nicole Anderson, and Shân Millie came together as co-editors to produce a book, which we talked about for probably a year before getting to publishing it.
The book is crowdsourced. We had 240 experts write small briefs for us to select from on the topics we wanted to cover—InsurTech from a technology viewpoint, InsurTech from a business model viewpoint, InsurTech from an operational design viewpoint. The key thing about the selection process is that we then selected 70 top abstracts from the 240 briefs based on a global voting mechanism, which ended up creating the structure of the book. I liked this outside-in, open, innovation-based approach to designing and producing a book.
One final question for you, who do you think is doing really interesting work in InsurTech?
One venture I admire is Bought by Many, a pet insurance company in the U.K. run by Steven Mendel and my dear friend, Charlotte Halkett, who I’ve known for a very long time because she's been working in a number of very successful ventures. This is a strong team that I want to call out because the reason why they are doing so well is because they understand their clients, serve those clients very well, and leverage social and digital mechanisms to really fulfill those needs. It's also about the team. They have a very strong team, very focused but agreeable—people that gel together.
I want to shout out Lemonade for sure too. They are demonstrating that disruptors can just get it done. And disruption is not going to stop with the few unicorns we have in the market, others will come in to start changing the industry and changing the way insurance is sold. And, you know, we hear that insurance is sold not bought, maybe insurance will be bought someday.
Thanks, it’s been great chatting. If people want to get in touch, how should they?
You can find me on LinkedIn or on Twitter (@SabineVdL). Or you can email me at sabine@alchemycrew.com!