FirstBest Systems Banks $6M Series B Financing, Looks to Help Insurers Overcome Economic Slump
Here’s a firm that may see demand for its products increase due to adverse economics in its target market. FirstBest Systems, a Bedford, MA, provider of underwriting software that could help property and casualty insurers expand their businesses, says it has wrapped up a $6 million second round of financing to ensure its own growth.
Previous investors Flybridge Capital Partners of Boston and New York’s Brookstone Partners led the round, which also included investments from other existing backers, according to the company. Flybridge general partner Chip Hazard, who is on the board of directors at FirstBest, tells me that the second round of financing should support the company until it becomes profitable. And an intended benefit of the company’s software is appropriate for the tough economic times: to help commercial insurance firms do more business with the same number of workers.
How is that done? FirstBest’s Web-based software automates steps in the underwriting process to help insurance companies nix time-consuming paper pushing and other manual tasks. The software also has a portal that enables insurance agents in the field and underwriters to interact in real time wherever they have Internet connections. Here’s a demonstration of how the system works. Nowadays, property and casualty insurers are grappling with lower premiums for policies than years past, and the slumping economy has decreased insurance companies’ income from investment assets, Hazard says. These factors could fuel demand for FirstBest’s software, which aims to help insurance companies issue more quality policies than before.
“Being able to cast a wider net and write more business with your existing staff is important,” Hazard says, “and we tend to think that in this environment … what FirstBest is doing is going to bring a lot of value to the market.”
Hazard says that there are between 1,200 and 1,500 potential customers in the property and casualty insurance business, a market that he estimates to be in the hundreds of millions of dollars per year. There are other outfits that offer some of the features in FirstBest’s software such as an agent portal and underwriting administration, yet Hazard says that FirstBest has integrated multiple aspects of the underwriting process into a single product. He also notes that the company’s managers have proven to be successful in a past venture.
Indeed, FirstBest co-founder and CEO John Belizaire was also a founder and chief executive of The Theory Center, a Boston provider of Java-based software for developing e-commerce sites, which was sold to software firm BEA Systems (now part of Oracle) for a reported $100 million in 1999. (FirstBest says that the sum paid for The Theory Center was actually more like $160 million.) And other FirstBest executives who previously worked at The Theory Center include the firm’s chief operating officer, Joseph Pilkerton, and chief technology officer, Julian Pelenur, both of whom are also founders of FirstBest. The trio of software executives founded FirstBest in 2006 and raised $7 million in a Series A round of financing that closed in 2007.