Capsule is a recently launched insurance broker for innovative tech companies who are on an impressive growth trajectory but don’t yet have the insurance programme they need to stay one step ahead of effectively managing their business risks.
We talk to founders Tom Wynne and Liam Green to find out what Capsule does, what it stands for, and how it all started.
We’ll start with an easy one - who are you both and what are your backgrounds?
Tom: Hi! I’m CEO at Capsule, and was previously MD at Kingsbridge Group until recently. Both Liam and I worked at Kingsbridge in various positions for over 10 years, and were quite literally employee 1 and 2! My specialism has always been the commercial and strategy side of things. At Kingsbridge we went on our first scale-up journey; through two rounds of PE investment, to a US trade sale - taking the business from a startup into a top 50 UK broker - so we know the challenges of rapid growth well.
Liam: Hello! I’m COO at Capsule, and was previously underwriting director and then divisional MD at Kingsbridge. I’ve historically focused on insurance innovation and operations so Tom and I make a good team. As Tom said, we went on an amazing growth journey at Kingsbridge, as a company and also as individuals! I started in the company on the phones trying to get sales through the door and ended up in a leadership role, so I know what it’s like to put blood, sweat, and tears into building a business.
Another obvious one, but what exactly does Capsule do?
Liam: So I guess it’s best to start with the problem we identified first and foremost for scale-up businesses to better explain what we do and why.
The normal insurance broker model for SMEs really isn’t fit for purpose for scale-ups – i.e. businesses that are growing 20% year on year and are absolutely smashing it in terms of expansion. A traditional insurance broker will help get an SME/start-up sorted with their insurances but then not review their cover until their annual renewal, by which time their insurances may well be out of date in terms of cover levels and limits.
These traditional brokers also often don’t get a true idea of what a scale-up’s ambitions and growth potential are; they usually provide a pretty simple form that asks for turnover, staff numbers etc. and they’re then insured on that basis. Not trying to bash the industry here by the way, scale-ups tend to be an outlier in an SME portfolio, so their broker just doesn’t have the business model to manage the risk effectively.
What we do at Capsule is apply our specialist knowledge and tools to generate a detailed understanding of their current insurance programme and the business’ future ambitions. Obviously, it’s important that we meet their needs right now but equally that we help enable their growth, by making sure that their insurance programme scales with them.
To do this, we schedule regular check-ins to make sure our customers are one step ahead of their risks at any given time. We know our customers are the big businesses of tomorrow, so being pigeonholed into an SME solution doesn’t give them access to the products and services that larger corporates benefit from. This is despite many scale-ups having global ambitions that could easily be realised, provided they have the right insurance in place.
Tom: I think it’s not just that scale-ups get template treatment, but also it’s often the case that they haven’t had their culture and expertise recognised either. They don’t fit easily into a traditional insurance brokers customer base, and their growth prospects aren’t rewarded by the insurance market. Capsule’s core focus is around pro-active support for scale-ups and their management teams so that they can access the best products and services available.
Where did you get the idea for Capsule from?
Tom: I’ve always had an interest in innovation and disruption in business. Looking at examples of super rapid growth businesses like Monzo, PensionBee , Wild and the like, I challenged my insurance colleagues and peers within the industry as to what level of support and service these businesses are currently getting versus what they actually need – and it was clear there was a gulf between the two.
The idea for Capsule’s solution to this problem actually all came from me reading Fast Track where I initially got super into following the progress of next-gen businesses. I’d had this seed of an idea in my mind for a while, but that really kind of pushed me to start disrupting the scale-up market.
Liam: Even back in the early days of working together, we’ve always had a passion for innovative, agile businesses in the insurance space and have strived to do that ourselves. With Capsule, we wanted to clear the path for other scaling businesses and remove the roadblocks from an insurance perspective so they can grow at the rate of their ambition.
What’s your mission at Capsule?
Tom: Insurance is still a very traditional – some would say fusty - arena, which we want to reinvigorate and shake up! As we mentioned previously, we’ve been on our own scale-up journey and we know what it’s like to run a venture-backed business. On that journey we got great experience acting as a diligence partner for the private equity market, and it all culminated in a 9-figure exit to a US buyer. So we’ve been there ourselves. Having sold that business and taken some time to reflect, we really wanted to get back to what we are passionate about – innovation and disruption to enable our customers’ ambition!
It still bowls me over to think how incredibly important scale-ups are to the UK economy, yet they have no specific solutions tailored to them. They contribute 50% of total SME turnover, despite making up only 1% of the SME population! I think it works out as 6 million SMEs and only 34k scale-ups, yet lots of people still don’t know what a scale-up is – our mission is to change that.
Liam: As Tom said, we have unique set of experience, working with start-ups to FTSE businesses, so we know the market.
Our mission is to disrupt the established status quo. It’s all about how well-served scale-ups feel. Scale-up founders tell us that they are underserved; they feel frustrated, and we can understand why. The term scale-up isn’t recognised by the UK insurance market, despite the incredible growth prospects that these innovative businesses show. Instead of being embraced by insurance providers, they’re almost penalised through a lack of understanding, despite investors actively looking for these successful businesses of the future!
It’s all about partnering with our clients through every step of their scale-up journey. A lot of the time, we’re working with first-time founders and FDs and they value the support and expertise we bring – particularly as we’re generally eye to eye with them in terms of the culture and the values that we share.
I know ESG is something you’re both passionate about. Why is it important for Capsule and your clients?
Tom: Liam and I have always been passionate about the role that business plays in society. ESG specifically is something we were first exposed to it when running our last venture-backed business. It is when I started to look at the link between scale-up growth and ESG factors, that we realised that there was a direct correlation to the overall resilience of the business. Often, the principles of ESG are already baked into the DNA of scale-ups. At Capsule we believe that this should be recognised and rewarded in the insurance world, in the same way it is in the investment arena. Why should rapid growth be a scary thing if we can prove that it’s sustainable and responsible? Surely ambitious and innovative business should be celebrated.
Liam: ESG factors, including the way that a company treats its staff and customers, are a proxy for a good, strong, stable business that should make less severe and less frequent claims than one that’s not acting in this way. This should be used as a basis for insurance risk calculation. I personally can’t think of any better way of measuring business risk in next-generation businesses.
Capsule business insurance is here to help
Capsule offers high quality and flexible insurance for scale-ups. In addition, we won’t just recognise companies that are already making great environmental and social strides, we’ll reward them with better insurance, products and premiums.
To find out more about the good work we’re doing here at Capsule, and to start a conversation with us about how your company can benefit, drop us a message at hello@capsulecover.com.