When Itai Ben-Zaken’s first startup failed in 2018, the former BCG consultant and Wharton MBA spent months trying to understand what he could have done differently during the five years he ran the company.
After analyzing most of his major decisions, he concluded that while Comprendi, a digital ad recommendation business, was an interesting proposition, its biggest mistake was trying to operate in a market with two dominant players: Google and Facebook.
So when Ben-Zaken began exploring founding his second startup, he vowed not to repeat the same mistake. He tried to start a business in a market divided among many competitors, eventually ending up building a company that offers property and casualty insurance for homeowners and condo associations.
The largest carrier in homeowners insurance — Travelers — accounted for only about 7% of the market, and the rest of the competitive landscape was spread across 100 smaller providers, Ben-Zaken told TechCrunch.
Ben-Zaken was no stranger to insurance. Prior to starting Comprendi, he spent four years running Insurance.com at QuinStreet, a white-label financial services marketplace manager.
It launched Honeycomb insurance in 2019, and after spending two years building its computer vision and AI-driven property “inspection” technology, the company sold its first policy in 2021. Ben-Zaken says Honeycomb’s AI is based on aerial photography building roofs, often eliminating the need for costly physical inspections.
The company raised a $15 million Series A in early 2022 and is currently on track to sell $130 million in premiums in 2024, a threefold increase from last year.
When Honeycomb was preparing to raise its Series B earlier this year, one of the first calls Ben-Zaken made was to solo venture capitalist Oren Zeev, who is known as one of the largest shareholders in Navan, Houzz, Next Insurance and Tipalti .
“I was blown away by what I saw,” Zeev said of Honeycomb. He agreed to back Honeycomb, but only if Ben-Zaken agreed not to pitch the deal to other investors.
Ben-Zaken didn’t think twice about Zeev’s proposal: He’s dreamed of having the solo VC as his backer and on Honeycomb’s board since he founded the company.
Zeev wrote a $30 million check to Honeycomb, making him the company’s largest shareholder. Other participants in the $36 million Series B the Chicago-based startup is announcing Tuesday include new investors Arkin Holdings and Launchbay Capital and returning backers Ibex Investors, Phoenix Insurance and IT-Farm.
Zeev, too, is no stranger to the insurtech space — he owns a large stake in Next Insurance and was a backer of Hippo Insurance before it went public via a SPAC in 2021 — but said he’s generally not a “fan” of the sector.
“I wasn’t looking for another investment in insurance,” he told TechCrunch. “The bar is very high because I know the challenges.”
In addition to the company’s rapid growth, what attracted Zeev to Honeycomb is that homeowners insurance is a sleepy industry ripe for innovation, but the industry isn’t big enough for insurance giants to want to tackle. In other words, Zeev isn’t worried about major players encroaching on Honeycomb’s territory, as they did in Ben-Zaken’s first startup.
According to Ben-Zaken, the homeowners association and condo insurance market is still very fragmented. He says there are two startups in the space: Steadywhich raised a $28.5 million Series B last July and Obie, which closed a $25.5 million Series B from Battery Ventures a year ago.
Honeycomb will use its new funding to double its headcount from 90 to 180 over the next 18 months, introduce new products and expand its offerings into new markets.
“We plan to go beyond homeowners insurance,” said Ben Zaken, adding that his company’s goal is to be a one-stop shop for commercial property insurance.
