Iowa, and Des Moines in particular, in the 1980s fostered a business climate that enabled insurance and financial institutions to prosper. Today, the focus is on creating an environment that supports innovation and entrepreneurism in businesses that serve the insurance industry.

“Des Moines and Iowa have a fantastic startup scene. We have a lot of startup maturity. We have a lot of city and state government programs that support entrepreneurs” in Iowa, said Brian Hemesath, managing director of the Des Moines-based Global Insurance Accelerator.

GIA describes itself as the “world’s first startup accelerator focused on the global insurance industry.” A mentor-driven program, its focus is to develop innovative companies with products geared toward the insurance industry.mentorship-innovation-global-insurance-accelerator-580x326

Debi Durham, director of the Iowa Economic Development Authority, said Iowa has one of the lowest premium taxes in the nation, a fair and consistent regulatory environment, and there’s an “incredible startup movement that’s going on” in both biotech industries and advanced manufacturing.

And as Durham sees it, companies that develop out of the insurance accelerator will be an additional platform for growth under the state’s economic strategy.

Backed financially by insurance carriers, the accelerator was created in 2014 as an initiative of the Greater Des Moines Partnership, which operates like a regional chamber of commerce. GIA was introduced at the inaugural Global Insurance Symposium that year and held its first startup class in 2015.

Hemesath credited the partnership with doing much of the work to establish the region as not only an insurance center but a place where startups can thrive.

“There was an incubator called Startup City that was the first of its kind in Des Moines,” Hemesath said. Though now defunct, the partnership was interested in taking the lessons learned from that incubator and focusing on a niche market. “With Iowa being so strong in insurance, it was natural for that to take shape,” he noted.

Seven insurance companies located in central Iowa made the core investment in the Global Insurance Accelerator. Each committed to contributing $100,000 per year to support the initiative, and it began its first year with $700,000 in the GIA 2015 fund.

Half of the funding goes to operations including Hemesath’s full-time salary, office space, and events and marketing.

The other half goes toward funding the program itself, Hemesath said. Each of the six startups accepted into the class last year received $40,000 in the form of seed money in exchange for 6 percent equity.

The program lasts for 100 days, and teams selected to participate must commit to relocating to Des Moines for the entire time.

“Outside of the 40 grand, the biggest benefit they get is access to our mentor network. In 2015, we had 80 mentors signed on to our program, 40 of which were from the insurance industry. This year, in 2016, we have 110 mentors on our roster, 60 of which are from the insurance industry. So, we’ve grown that base. We now reach over 20 carriers through either our mentor network or my personal networks that we’ve made over the past year,” Hemesath said. “That’s the biggest reason the startups want to be here. It’s all about access.”

GIAlogo_final-1-300x136There were twice the number of applicants to the program this year than in 2015, he said. Like last year, applicants and those selected to participate in the program came from both inside and outside the United States. Of the six program participants in 2015, one came from Germany and one from Brazil. One was a Silicon Valley-based company, one was from Nebraska, and two were located in Iowa. This year’s roster includes participants from Canada and Ireland, along with teams from California, Minnesota, New York and Wisconsin.

The main criteria for acceptance into the class is that the proposed business model has to serve the insurance industry. “We want to make sure we’re supporting startups that are building things for the industry,” Hemesath said. “What I mean by that is we’re not looking to create new insurance companies or insurance products but rather support systems to improve the effectiveness and efficiency of insurance.”

The selection committee, which includes representatives from the seven investing companies, also seeks innovation.

“We look at the solution that is being proposed to the problem, and we just assess as best as possible how innovative it is. That’s obviously a very subjective matter. But the innovation side is important to us,” Hemesath said.

The application process captures startups through an online form, followed by basic analysis. Once applicants get through that process, the selection committee members rank the startups on what they like. From there, Skype or remote video interviews are conducted. “Obviously, you can tell a lot interacting with somebody, even over video. Just how well they can present themselves, if they can answer the hard questions, things like that. From there, we make our final selections,” he said.

The volunteer mentors are the “backbone of the program,” according to Hemesath.

“It’s awesome to watch these mentors who have been in a corporate America setting for five, 10, 20 years come into our office, and their minds are just blown at the energy and the excitement. A quote I love is, ‘Startups don’t know what they’re trying to do can’t be done.’ Right? It’s that attitude that startups have, that ‘I’m going to get this done.'”

So far the class of 2015 appears to be doing well.

“Statistically they should all be out of business. But the reality is, four of the six have either raised money or acquired customers. So, we are doing what we were built to do, which is to help the startups really get a leg up in the industry,” he said.

Drive Spotter

One of last year’s accelerator participants, Drive Spotter, recently completed a $750,000 financing round with Grinnell Mutual Insurance—a GIA investor—leading the funding. Voss Distributing, a multistate Red Bull distributor, and other investors also pitched in.

Omaha, Neb.-based Drive Spotter’s video analytics platform analyzes and aims to improve commercial fleet vehicle and driver performance. Drive Spotter President Chris Augeri said this initial funding will enable the company to grow its team in the Midwest, including in the fleet operations office in Des Moines.

Augeri said the connections he made through the Global Insurance Accelerator, such as with Grinnell Mutual, were invaluable.

“We got a lot of very excellent mentorship on what was feasible, what wasn’t feasible, what were the real problems, what would be something that the fleets could use but also that the insurance companies would appreciate,” Augeri said.

“Frankly, that sort of Petri dish of mentorship in my mind was the No. 1 benefit,” he added.

Augeri has an advanced degree in computer science and has been working for about 10 years in the video analysis space, particularly as it pertains to drone operations. He said he learned about the GIA through an acquaintance. But the idea to apply his video analysis background for use in the commercial trucking and insurance industries came from personal experience.

“I nearly fell asleep once or twice myself—once as a driver and once as a passenger. It was very firsthand, no accident or anything. It was certainly enough to get me thinking about what could be done to reduce or combat driver fatigue,” Augeri said.

“Outside of the 40 grand, the biggest benefit they get is access to our mentor network. In 2015, we had 80 mentors signed on to our program, 40 of which were from the insurance industry. This year, in 2016, we have 110 mentors on our roster, 60 of which are from the insurance industry.”

Shortly after that, the limousine in which the comedian Tracy Morgan was riding was rear-ended by a commercial truck driver suffering from driver fatigue.

“We started looking at that problem and what could be done leveraging video analytics—basically leveraging our technology expertise,” he said.

Augeri said as an entrepreneur it’s easy to think that because “you have an idea and this idea is your baby…everybody should love it.”

In the accelerator his team had the exact opposite experience, however.

“We had an idea. That idea lasted precisely seven days. The initial concept that we walked in with was so very hardware-focused. It was going to take tens of millions of dollars to probably bring to market. We very quickly tabled that,” he said.

In addition to the range of relationships he was able to develop with the program’s mentors, “many of these mentors have led to other relationships that have been perhaps even significantly more valuable,” Augeri said. “Brian [Hemesath] himself is a testament to that. Brian provided me a lot of direct mentorship. He also introduced us to a lot of key people.”

Global Insurance Symposium and GIA

Following its introduction at the inaugural Global Insurance Symposium in Des Moines in 2014, the GIA had its own showcase at the symposium in 2015.

“We were a small segment of the 2015 Global Insurance Symposium. We had 75 minutes on stage to show our six startups, to let them present. They had their five, six, seven minutes on stage,” Hemesath said.

Symposium exit interviews showed that the GIA segment was the top-rated presentation by participants, so Hemesath decided to build on that.

“I’m happy to share that in the 2016 Symposium, we have created an innovation track that has a number of topics that are very relevant to innovation in the industry,” he added.

In fact, the overall theme for this year’s Global Insurance Symposium, which will be held April 26-28, is “Inspiring Innovation in the Insurance Industry.”

In its third year, the symposium is jointly sponsored by the Iowa Insurance Institute, the Federation of Iowa Insurers, the Iowa Economic Development Authority, the Greater Des Moines Partnership and the Iowa Insurance Division.

Hemesath said the GIA has also established a partnership with ACORD, the insurance industry global standards and services association, to present the ACORD Innovation Challenge, which takes place during the symposium. GIA is helping to host and facilitate the challenge, which gives startups a platform to present and pitch their ideas.

Des Moines is one of four cities worldwide to host an ACORD Insurance Innovation Challenge event.

Topics InsurTech Market Iowa