Insurance essentials for start-ups post raise
Congrats on closing your funding round! No doubt it took a lot of hard work, resilience and sleepless nights to get here.
With the money safely in your bank account you now have the resources to grow and build the business you always envisioned – time to expand the team, build new features, maybe expand overseas?
However you decide to use the funds, your pre-raise business will very quickly change. With more turnover, more clients and more people, there’s also more risk. Before investment, insurance was probably a low priority, ‘good enough for now’. But don’t be caught out.
Post raise is the best time to take a second look at your insurance and make sure you’re protected in the new era. With downside risk taken care of, you can focus on delivering for your new clients – and investors.
Here are our top insurance tips for founders post raise:
1. Check your investor agreement
It likely came with requirements for directors’ and officers’ and key person insurances.
2. Get your IP protected
If you’re spending funds to build new technology or further drug research, you should be protecting that IP you’re developing. Insurance can help with that – and shield you from the financial impact of an IP infringement allegation from a competitor.
3. Make sure your insurer understands your business.
You might have used an online portal to get started. But f you’re still having to select your business description from a drop-down list, there’s a good chance the cover doesn’t quite fit your business activities. The more complex your business gets, the more important it is that your insurer understands exactly what you do and what risks they’re underwriting. Otherwise you could find the insurance contract isn’t worth the paper it’s written on.
4. Don’t wait until renewal to refresh your insurance
Funding changes the trajectory of your growth. If you renewed your insurance six months ago, your projections may have changed a lot post-raise. Make sure the staff numbers, turnover and the countries where you trade are still accurate in your policies.
Time to talk to a broker?
The simplest way to meet these points is to speak to a specialist broker.
The right broker should:
- Easily understand what you’re building and how you’re using the funds
- Work with other companies in your sector
- Highlight risks that change as you scale
- Review your client and investor contracts for insurance requirements
- Understand the pace and priorities of VC backed companies.
Why Aguila?
Aguila is a specialist insurance broker for innovative and creative companies. We offer joined-up advice tailored to your growth stage. With offices in London, Cambridge, Brussels and New York, we’ve built a model that grows with you.
We’ve seen what goes wrong, and we help fix insurance setups that weren’t built to scale – so you don’t run into problems later.
Get in touch today
If you want to talk any of this through, here’s my direct email: luke.chesworth@aguilarisk.com.