InsurTech Trends and Opportunities — Steve Pretre, Partner at World Innovation Lab
In this episode, Miguel Armaza interviews Steve Pretre, Partner at World Innovation Labs, a US and Japan-based venture capital fund with investors from governments and corporations in Japan and throughout Asia.
Steve is also a fintech veteran with particular expertise in the insurance space, having spent several years at RMS and Asurion as an operator and then co-founding Metromile, one of the very first insurtech innovators that leveraged technology to build a better and cheaper consumer product.
Steve is an MBA graduate from the Wharton School and holds two bachelor degrees from Stanford University.
Although Steve Pretre is now a full-time VC investor, he actually spent most of his career as an operator and founder in the InsurTech space. After working for over a decade at some of the earliest innovators of the insurance industry like RMS and Asurion, Steve took his lessons and experiences to launch Metromile in 2013 — one of the first InsurTech pioneers.
Pioneering Insurtech
Realizing technology was opening new possibilities within the insurance space, Steve pioneered pay-per-mile car insurance at Metromile. The concept was simple, users would have to pay for usage-based insurance, which consisted of a base rate along with a fixed rate per mile driven. This billing model was intended to benefit low-mileage drivers and, oftentimes, resulted in significantly cheaper insurance rates for its users.
Historically, there had been no way to track client-driven miles, so most insurers would assume everyone lied on their application and compensated by overcharging the user. But with the advent of GPS and mobile technology, Steve and team realized they could actually validate how many miles someone was driving and revolutionized the pricing model to provide a unique product that solved an unmet need of 20–30% of the US market.
From Operator to Investor
Having worked in the industry for over two decades, Steve realized he had built up a lot of experience and wanted to share it with other founders. So he decided to join World Innovation Lab (WiL) in 2017. WiL is an early-stage VC, whose LPs are some of the largest Japanese corporates across multiple different industries, but with a strong focus on financial services and insurance. In his role, Steve is able to invest in early-stage fintechs, while flexing his operating experience to help companies with a business development angle, focused on scaling and expanding to new markets and customer segments. He also works closely with WiL’s Japanese investment team and is particularly interested in helping companies enter the Japanese market.
Although Steve tells us WiL is able to move fast on an investment decision, this is certainly not their typical or preferred scenario. They normally start talking to teams early and work on developing a relationship for several months before moving forward with an investment, in his own words “oftentimes, it is a 10 year relationship that you are building. And so, you know, we definitely do like to have a pre-existing relationship.”
It also goes both ways, it is just as important for founders to make sure they can have a great working relationship with their investors and that they will be able to add value, “A lot of founders get caught up in certainly the excitement or thrill of who is offering me the term sheet with the highest valuation and writing the biggest check and some of those kinds of things. Oftentimes, that is not the best investor.” It is more important to get someone with expertise and who will be engaged and take the time to get to know people across the company and management team, with intellectual curiosity around your business.
The State of InsurTech
Over the last five years, the insurance industry has seen the rise of the disruptor. Companies like Metromile and Lemonade have pioneered disrupting models going after incumbents with digitally-native, mobile-first, and user-friendly strategies. The technology they have built has allowed them to challenge legacy systems with cloud-based, software-enabled products, with a lighter cost structure that scales incredibly well. However, the next stage of the InsurTech industry is giving rise to companies that are now delivering the software stack that allows any business to become an InsurTech company. Large incumbents are realizing they need to adapt and update their existing technology and are partnering with startups to meet those needs and move faster. Finally, non-FinTech businesses with access to consumer data of a specific customer base are now transitioning and offering insurance products. Going forward, Steve is convinced that API-first companies enabling product adoption will be at the core of the next generation of InsurTech.
The Future of Remote VC
Much like everyone else, Steve now takes his investor pitch meetings over zoom. Although not ideal, he has also realized that over the last few months Mr. Pretre has talked to a lot more international startups than ever before. Being remote has loosened some of the shackles on the geographic proximity between investors and founders and has made him rethink the investing model and the kind of companies to invest in. Going forward, he expects the companies WiL invests in will have a much broader geographic footprint than before.
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Steve Pretre
Steve Pretre is a veteran of multiple successful startups with deep operating experience across product development, marketing, and strategic planning. In his current role as Partner at World Innovation Lab, Steve works with leading startups in the fintech and insurtech space, including Ladder, PeerStreet, and Unqork. Prior to joining World Innovation Lab, Steve was the co-founder and CEO of Metromile, an early innovator that paved the path for the current wave of insurance startups. He held executive roles at Asurion, leading their mobile applications business unit as the company grew to a multi-billion dollar provider of mobile device insurance sold through the wireless carriers. He was the first marketing and product lead at RMS, which developed predictive risk modeling software that became the defacto standard for pricing and transfer of catastrophe risk for the global insurance industry. Steve holds an MBA from the Wharton School, where he graduated as a Palmer Scholar, and holds a BS in Mechanical Engineering and a BA in Economics from Stanford University.
About World Innovation Lab
World Innovation Lab (WiL) is a US & Japan-based VC firm with capital from governments and leading global corporations in Japan and throughout Asia — including Sony, Suzuki, NTT, KDDI, 7-Eleven & others.
WiL invests in companies that are ready to scale and enter new markets. The firm helps US startups expand to Japan and Asia, and Japanese startups expand worldwide. Recent direct company investments include Algolia, Asana, Automation Anywhere, Auth0, DataRobot, Kong, Mercari, MURAL, TransferWise, and Unqork. In addition to direct investment, WiL invests in exceptional venture funds — both established and emerging.
WiL also works with its corporate investors on evolving their own innovation capabilities through new business creation, partnerships with leading startups, and organizational culture change. WiL acts as the bridge between startups and corporates across key innovation hubs around the globe in driving growth — starting with Japan and the US.
