Blueprint Title, an insurtech startup working in the title insurance space, announced this morning that it closed a $16 million Series B. The new round was led by Forté Ventures. The startup previously raised an $8.5 million Series A in the final weeks of 2019.
While Blueprint is an insurtech startup and therefore fits into the neoinsurance cohort that we've tracked in recent quarters as a number of companies from the group have gone public, it's somewhat distinct. Blueprint is different from the Roots and MetroMiles and Hippos that debuted via traditional IPOs or SPACs; it largely sells to business customers and has a very different product on offer.
The neoinsurance companies that went public in the last year and a half sell to consumers. Blueprint, in contrast, sells to professional groups looking for a better title insurance experience. That means its customer base is not made up of consumers hoping to cover their main residence, Blueprint CEO Steve Berneman told TechCrunch in an interview.
That means that the company's go-to-market activities are distinct from its mates in the consumer-focused cohort and that its loss profile is very different.
Title insurance, Berneman said, has around a 1% to 4% claims rate, far lower than auto insurance, to pick an example. That means its risk profile is different, and its pricing less flexible; there's less loss ratio to wring out of title insurance underwriting, so cost and delivery of service are even more important than in other insurance varietals.
According to the CEO, the title insurance market in the United States today is made up of four companies with around 90% market share. And thanks to rules requiring public pricing in many states, there's alignment on pricing from some leading players. The result of market concentration and effective price harmonization is that Berneman thinks that the $18 billion title insurance business should really be a $10 billion market.
Our call with Blueprint was the first in which a startup discussed shrinking its market.
But the point is reasonable; if title insurance is mispriced, and Blueprint sells to corporate customers, it can likely offer profitable coverage at a lower-than-market price point -- and grow quickly in the process. That appears to be the case, with the startup stating in a release that it anticipates 400% revenue growth in 2021 when compared to 2020.
That growth rate explains the Nashville-based company's most recent round and what we presume was a stiff upsizing in its valuation.
As part of its funding round announcement, Blueprint also disclosed that it has purchased Southwest Land Title Insurance Company, an underwriting company. Berneman said that to shrink the title insurance market through more reasonable pricing, his company needs to be full-stack, i.e., both writing its own coverage and selling it. Otherwise, margins would leak on either side of its operations.
Blueprint, akin to Next Insurance, is a startup bet that selling insurance to business customers will prove to be a lucrative effort. Given that consumer-focused neoinsurance providers have seen Wall Street change its tune on their value, it will be interesting to watch this more B2B cohort grow and eventually debut.