NEXT Insurance’s Teodora Gouneva believes that a CFO can play a key role by acting as a kind of funding traffic cop at fast-growing disruptor companies like the insurtech firm she just joined.
Acting as a traffic cop is often viewed as an old-fashioned approach to the top finance seat, but Gouneva honed that sensibility at some of the highest profile tech companies in the U.S., including Airbnb, where she was vice president of finance, and PayPal, where she spent 15 years in roles that included CFO of acquired companies Braintree and Venmo.
“The old question that never gets old is, ‘how do you balance growth and profitability?’” says Gouneva, who joined NEXT as CFO last month. “It’s pretty critical for us. Businesses can get very distracted and go in too many directions because sometimes it’s so tempting when we see a lot of opportunities.”
Her approach will be put to the test. NEXT Insurance has been growing at breakneck pace, securing $250 million in funding last year that pegged the company at a $4 billion valuation although it’s not yet profitable.
The Palo Alto, California-based insurtech sells a range of coverage lines online to small businesses. Its lines include general liability, workers compensation and professional liability. Its targeted customers are self-employed and small businesses such as architectural firms, cleaning companies and Amazon sellers. Founded in 2016, the company serves over 300,000 small businesses.
In her first order of business, Gouneva is taking stock of the accounting side of her finance team and is also looking to build on recent growth on the financial planning and analysis (FP&A) side. She views the insights and direction of FP&A as critical. “The team has done some of the basic FP&A work over the last few years. Now we have the opportunity to put a little more muscle behind it,” she said.
FP&A plays an important role in public and private companies alike, she said. CEO Guy Goldstein has said the company doesn't have plans to go public but could do so at a later time.
Going forward, investments will be focused on expanding the company's professional industry segments along with the channels through which it sells its products. For instance, the company has sought to partner with other platforms that have small business users, like Square, where it can offer its insurance, a strategy it calls embedded insurance. The company also launched a mobile app through which customers can access the products.
Startup insurtechs, which sell insurance or insurance related services online, first took hold about 10 years ago, with early adopters focusing on selling home and auto insurance to consumers because it was one of the simpler products, said Kimberly Harris-Ferrante, a Gartner vice president.
“It’s changed the consumer expectation of how insurance can happen and put pressure on traditional insurers to be faster and more customer-centric,” she said.
The exit plan outlook for insurtech startups is brightening; insurance companies are starting to partner and invest in them and investors are increasingly eager to get in the game, Harris-Ferrante said. In 2020, insurance startup Lemonade raised $319 million in an IPO and Harris-Ferrante said more mergers and acquisitions are expected in the space this year.