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 in the five years he led the company.
After analyzing most of his key decisions, he concluded that while Comprendi, a digital ad recommendation company, was an interesting proposition, its biggest mistake was operating in a market with two dominant players: Google and Facebook.
When Ben-Zaken began considering launching his second startup, he vowed not to repeat the same mistake. He wanted to start a business in a market divided by many competitors and ultimately decided to build a company that provides property and casualty insurance to landlords and homeowners’ associations.
The largest provider of landlord insurance – traveler — only accounted for about 7% of the market, and the rest of the competitive landscape was spread out among 100 smaller vendors, Ben-Zaken told TechCrunch.
Ben-Zaken was no stranger to insurance. Before founding Comprendi, he led Insurance.com for four years at QuinStreet, an operator of white-label financial services marketplaces.
He started Honeycomb Insurance In 2019, the company sold its first policy of 2021 after spending two years building the company’s computer vision and AI-driven real estate “inspection” technology. Ben-Zaken says Honeycomb’s AI is based on aerial photography of building roofs, often eliminating the need for costly physical inspections.
The company raised $15 million in Series A funding in early 2022 and is currently on track to sell $130 million in insurance premiums in 2024, a three-fold increase from last year .
As Honeycomb prepared to raise its Series B earlier this year, one of Ben-Zaken’s first calls was to solo venture capitalist Oren Zeev, known for being 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 support Honeycomb, but only on the condition that Ben-Zaken would agree not to market the deal to other investors.
Ben-Zaken didn’t think twice about Zeev’s proposal: he dreamed of having the solo VC as his backer and on Honeycomb’s board since he founded the company.
Zeev wrote Honeycomb a check for $30 million, becoming the company’s largest shareholder. Other participants in the $36 million Series B the Chicago-based startup announced Tuesday include new investors Arkin Holdings and Launchbay Capital, as well as returning backers Ibex Investors, Phoenix Insurance and IT Farm.
Zeev is also no stranger to insurtech — 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 he said he’s not a “fan” of it in general Hippo Insurance the sector.
“I wasn’t looking for another investment in insurance,” he told TechCrunch. “The bar is set very high because I am aware of the challenges.”
What attracted Zeev to Honeycomb, aside from the company’s rapid growth, is the fact that landlord insurance is a “sleepy” industry that’s ripe for innovation, but the sector isn’t big enough for insurance giants to want to take on the challenge . In other words, Zeev isn’t worried about big players encroaching on Honeycomb’s territory like they did with Ben-Zaken’s first startup.
According to Ben-Zaken, the insurance market for landlords and homeowner associations remains highly fragmented. He says there are two startups in this space: Steadily, which raised $28.5 million in Series B funding last July, and Obie, which finished with a series worth $25.5 million B from Battery Ventures a year ago.
Honeycomb will use its new funding to double its headcount from 90 to 180 employees over the next 18 months, introduce new products and expand its offerings into new markets.
“We plan to go beyond landlord insurance,” Ben Zaken said, adding that his company’s goal is to be a one-stop shop for commercial property insurance.