Advent Insights

Shift – unleashing AI to help transform the insurance industry

Thomas Weisman and Douglas Hallstrom

May 11, 2021

Last week, we announced our investment in Shift Technology (“Shift”), one of the most impressive technology businesses our team has come across. Shift provides machine learning-powered cloud software to insurance carriers globally, to help them automate claims lifecycles and reduce fraud. Its business model sits at the intersection of two features which embody our investment strategy at Advent Tech, so we wanted to take this opportunity to outline our investment thesis in more detail.

Firstly, Shift is a sharply vertical-focused software business, that operates in a market which is undergoing rapid digital transformation. From the deepest line of code, all the way up to the customer success team, Shift was designed by insurance domain experts who understand the intricacies of workflows and pain points. This understanding underpins the journey Shift is on to expand its suite to help insurers automate bigger segments of the claims workflows, and ultimately become a true next-gen vertical platform-business. The more time we spent on reviewing its products and technology, the more impressed we became with the depth of Shift’s domain expertise. The team’s obsession with improving customers’ fraud detection performance to levels we’ve never before seen in the industry is just one example The more time we spent with Shift’s customers, the more vivid the impact Shift’s products have had on their operational performance became to us; customers often quoted 10x ROI on product spend. We knew we were onto something special.

As a firm, we have been studying and investing in the insurance industry for decades. Through our investments in companies like TransUnion (credit data) and CCC (software for the auto insurance industry), we have seen first-hand accelerating technology adoption in the insurance industry. The industry already spends over $200bn on IT every year, but the majority of this is spent on maintaining legacy technology stacks, increasingly out-of-date and with growing cyber and data breach exposures. We believe the next decade will see a growing number of forward-thinking insurers invest in modernizing their technology architectures, adopting a mix of low-code and 3rd party vendor applications, which will allow them to access the latest innovation across data science, AI, cloud and security. Through our activities in the insurance industry, we have also built great partnerships with executives and entrepreneurs who supported our diligence of Shift. Their shared excitement about Shift’s ability to drive value at-scale for insurance carriers, and their commitment to support the company going forward, further convinced us to make the investment. In the words of one leading insurance carrier CEO we spent time with during the process: “Fraud is the biggest cost-driver for carriers today, technology is the way to fight it, and Shift is the best arsenal for it I’ve seen.”

Secondly, alongside our colleagues in the financial services investment team, we have become increasingly interested in fraud as a massive business problem yet without widely used, scalable solutions. We see this in several domains: insurance, banking, capital markets, and ecommerce just to name a few. We have had the opportunity spend time with several innovative companies tackling fraud across these areas. Fraud will not be managed by manual process and human intervention to the same extent in five years (or even a year from now!) as it is today, and these businesses will capture the opportunity and thrive if they can continue to prove their effectiveness and scalability. Shift stands out within the insurance domain, with powerful AI algorithms for identifying fraud at-scale, and they have architected the technology and the organization as a truly scalable software company with ability to serve multiple use cases with a best-in-class, modular cloud technology stack.

We are investing in Shift at a pivotal moment. It has spent the last five years building amazing technology, product and an impressive customer base of forward-thinking insurers globally. We believe the team, product and operations are ready – and the market demand is there – for Shift to significantly accelerate go-to-market activities for the next five years, and become a true multi-product, Insurtech juggernaut. Our purpose at Advent Tech is to be the partner-of-choice to growth-focused founders and management teams building juggernaut businesses…Companies with the potential to have outsized impact in their markets. We believe Shift is that kind of business, and we are so excited to support Jeremy and team, as that kind of partner.

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