Link Investment Memos
Why Link Ventures invested in Breeze
Investment insights by Link Managing Director, Lisa Dolan
Breeze appeared on our radar thanks to Link’s proprietary web traffic algorithms and was soon reaffirmed via an introduction by trusted advisor, Jeff Smedsrud, co-Founder and head of healthcare products at Healthcare.com.
- The Category Leader in a Small Trojan Horse Go-to-Market.
What initially stood out to us about Breeze was its strong SEO and affiliate strategies. As seen in the traffic distribution chart below, Breeze is ranked at the top of Google searches for “Long-Term Disability Insurance”, despite many large, multi-billion incumbent carriers.
2. The Trojan Horse Go-to-Market — Disability Insurance / Income Insurance
The U.S. individual disability market is very small with only ~$430mm premium written in 2020, however Breeze has the potential to grow the market by making it easier for agents to quote and sell. Carriers and agents have been selling this product the same way for the last 20+ years on legacy tech and illustration systems. In fact, the majority of disability insurance sales have been sold through old-school Brokerage General Agencies (BGAs).
Furthermore, the Council for Disability Awareness reports that more than 25 percent of us will experience a disabling event that prevents us from working for at least three months before we retire. At present, 90% of claims that are filed for long term disability benefits stem actually from medical illnesses, not physical injuries. And when you consider the most common causes of long term disabilities, it’s really not all that surprising:
- Arthritis
- Back pain
- Cancer
- Depression
- Diabetes
- Heart disease
- Stroke
What this means is that the scope of disabilities that can prevent you from earning an income is a lot broader than most people realize. Our hope and hypothesis is that Breeze will grow the disability insurance market and enter new products such as short term disability, disability group plans, and critical illness.
3. Understanding how to market the “Jobs” of disability insurance will increase the market size:
When getting to know a company, I love to understand the “Job(s)” a customer is hiring the company to do. As Clay Christensen taught us, by understanding the job that a product does for a customer, we can improve the marketing and service of that job to grow the category. This is particularly important to understanding Breeze’s opportunity given the gap mentioned above between the market today and potential utilization.
We spoke to a few customers and went through hundreds of customer feedback forms to understand the customer problem better. The reasons to enroll in independent disability / income insurance policies include those who:
- Are in professions that put someone in a higher need for insurance
- Change jobs every few years or even months. This is a trend we are seeing today, particularly among 1099 workers
- Experience life changes that create more financial responsibility E.g. having a new child, a mortgage, or starting a business
- Want to improve their personal financial position
In fact, I spoke to one gentleman who has a typical story. He works for the federal government and was going through a Dave Ramsey debt eradication program. As part of that program, you determine if you are under or over insured. In his personal research process, he Google’d “long term disability insurance” and compared monthly premiums compared to benefits, and found Breeze was a much better value policy than was offered through his employer. Furthermore, regardless of where he may be employed, he would like to have disability insurance. And so, he chose Breeze.
After our conversations with several insurance carriers, the need for Breeze is clear. DI carriers want to sell digitally D2C, they need exposure to different areas of the market (occupations), and they don’t have the data science capabilities to match consumers based on occupation, worker type, health underwriting, etc. to the appropriate policy. That’s where Breeze comes in.
3. Team
Above all else, we invest in people and enjoy getting to know our founders. Meet Colin Nabity, CEO, and Cody Leach, CTO. They have great experience in disability insurance, and have really strong carrier relationships with the leading players in the space. Colin is a former banker and previously built LeverageRx, a financial and insurance product marketplace that is profitable and growing today. His long time business partner, Cody Leach, is a seasoned UI designer and software engineer who co-founded LeverageRX.
With this understanding of the customer and the potential market opportunity, we decided to lead their Series A; we’re Team Breeze all the way.
