Mark Shaw likes to run around.
The serial entrepreneur joined activity and fitness tracking platform Strava as co-founder in 2009 to lead engineering as CTO. He spent eight years there, and by the most recent surge in 2020, Strava had reached 70 million members worldwide and garnered an almost cult-like following from its users, including professional runners trying to track their progress.
Prior to that, Shaw helped launch insurance software outfit Guidewire. Again, he helped take the company to a different level with his engineering, analytics and marketing chops before going public in 2012.
After a break from those two jobs, Shaw launched his third company in 2020 with Josh Weiss and Graham Gerlach: Inclined. Even if the fintech startup hasn’t gained tens of millions of users or gone public, it’s thriving on its own. And it just raised $15 million in Series A funding to develop and grow its technology.
Shaw admits it’s a very different company than Strava. The startup offers loans against whole life insurance policies, aiming to digitize “The process involves many traditional time-intensive operations, he said.
“There’s a trillion dollars of cash value in the US alone over the course of a lifetime,” Weiss told Technology Flow. “We want to take this huge opportunity.”
The current loan market is $150 billion versus $1.1 trillion, and that was Inclined’s initial focus.
“We believe we can increase that lending rate with our improved rates and efficiency,” Shaw said.
Hudson Structured Ventures led Inclined’s Series A financing, which also included participation from Anthemis Group and other new and existing backers. The startup has raised a total of $19 million since early 2020.
The startup’s Series A was described as “the most brutal fundraising environment” he’s experienced in the past two decades.
“Ours is a counter-cyclical business and a very safe debt,” he told Technology Flow. “This is the time when people need to get these loans. It’s time for us to step up – we can make a big impact in these unfortunate, tough times.
Whole life insurance policies are different from term life Accumulate value that is available forever rather than paying for coverage. Shaw compares it to buying and renting a home.
And when whole life policyholders want to access their cash value, they often choose to borrow rather than withdraw money directly, which is less efficient, he explained.
In addition to opening up the opportunity for more people to borrow against whole life insurance policies — historically reserved for the wealthy — it also gives banks a way to better participate in the market. And since banks often have “much lower rates than insurance companies,” borrowers borrow at lower interest rates, Shaw explained. Plus, their money is compounded over decades.
“This means they can realize five-10 times more value from their life insurance over their lifetime,” Shah told Technology Flow.
Inclined Mechanics is live with the bank, which has approximately $20 billion in assets under management. And it currently has several million dollars on its platform.
Vikas Singhal, Founding Partner at HSCM Ventures, Inclined believes that a single digitally-enabled financial transaction engages four “distinct but important parties”: insurance companies, agents/brokers, lenders/banks and policyholders.
“The financial transaction provides immediate value to the end customer — reducing the cost of borrowing for an already-borrowed policyholder — but also provides highly aligned and equally important value to all other parties,” Singhal wrote via email. “This is economic democracy at its best. Although refinancing of existing policy loans has been around for some time, it is not always accessible to everyone and a digitally enabled turnkey solution unlocks the potential for everyone to benefit.
His company also sees Inclined’s offering as just a starting point.
“We believe that market as a whole can benefit from the underutilized asset of cash value within permanent life insurance products and banking products built around that,” added Singhal.
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