Ganesh Rengaswamy (Quona) & Kulin Shah (Onsurity) on the insurtech landscape in India, the founder-investor relationship and scaling Onsurity

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Jul 06, 2023

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On this episode Pat sits down with seasoned entrepreneur and investor Ganesh Rengaswamy, co-founding partner of leading fintech inclusion fund Quona and Kulin Shah, Co-Founder and CEO of Onsurity, a leading Indian insurtech.

We dive into the founder-investor relationship, the insuretech space in India and how to manage boards successfully.

Tl, dr

Affordable employee healthcare and benefits: Onsurity is India’s only monthly payable employee healthcare platform with group health benefits for members suitable for SMEs, MSMEs and startups.
From pure-play to full-stack: The Indian Insurtech sector is currently moving from simple insurance distribution models to complex, full-stack platforms. To create a "pull product" it’s crucial to prioritise underwriting, claims experience, and employing embedded insurance to distribute products at a lower cost of acquisition.
“Stick around” vs. “Fair weather”: To build a trusting relationship it is important for investors to engage with founders. One of the main value adds of investors is to provide a bird's eye view on the business, sometimes pointing out unseen problems due to the founders' immersive involvement.
Sounding board: A board should be capable to discuss problems openly, asking challenging questions, and bringing best practices from their broad exposure to other companies and trends.

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Solve your own problem

Starting off, we listen to Kulin Shah on the founding of Onsurity. He comments that through the struggle of securing health benefits for a small team competing with big corporates the idea for the company was born.

"Best startups are built when you're trying to solve your own problem."

Onsurity was developed with the vision to address benefits-related needs of over 63 million SMBs in India. In a market where only 5% of workers currently have health benefits, Kulin shares the impressive journey of their unique monthly health care subscription plan:

"Onsurity is the only player in India which has combined health care, wellness, and health insurance under a single product, and is providing that on a monthly subscription basis."

Ganesh, having founded one of the largest hotel consolidators in South Asia, has firsthand experience in understanding the potential for digitization and tech in financial services, which led to the inception of Quona.

"Most of the investors we dealt with in the ecosystem had limited entrepreneurial experience... the ability to empathize with entrepreneurs is very limited."

This gap inspired Ganesh to connect with Monica and Jonathan, the other two co-founders of Quona, a leading fintech inclusion fund focusing on financial innovation through tech. Out of this Quona, as an entrepreneur - founder fund was born.

Ganesh main motivation to invest in Onsurity is the start-ups potential impact:

"One of the fundamental criteria for us when identifying opportunities is the potential to make a significant impact. Given the limited penetration of insurance and health benefits in India, particularly within SMEs, it's an area we are particularly excited about."

However, for Ganesh it is not only the importance of Onsurity’s mission to enhance the quality of products for the consumer, making them more meaningful and reliable, but also the founding team itself:

"Kulin and Yogesh are truly passionate about what they do. Yogesh has an inherent knack for insurance, while Kulin has big sales talent. Ultimately, the best way to support them was to invest."

From pure-play distribution models to full-stack platforms

Although small changes might not be noticeable over a year or two, the long-term view shows distinct evolution cycles in how solutions have matured. From rudimentary insurance distribution models to more sophisticated full-stack platforms, Gansesh sees the potential for continued growth and innovation.

He also underscored the significance of embedded insurance, saying it

"[...] could be combined with one of these other models where you could be a full stack platform offered to other players as a platform embedded into their core solution."

Kulin also believes that insurtech is moving away from mere distribution models to focus more on product creation and improving the claims experience. He suggested that the only way to make insurance a "pull product" is by prioritizing underwriting, claims experience, and employing embedded insurance to distribute products at a lower cost of acquisition.

Today, Onsurity, with a retention ratio of 88%, has outgrown the state of being a “Covid baby.".

"We launched our alpha product in June of 2020 and went live by August of 2020, amidst the Covid wave. There was already a macro environment where the awareness for health insurance had increased. To date, our retention ratio stands at about 88% because once an SME rolls out a benefit, they can't roll it back. It becomes a part and parcel of their company."

Insurance Concierge Team

Off to the elephant in the room - the issue of benefits portability. To Pat’s query on whether employees risk losing their benefits when they move employers, Kulin explains that in India, most of the corporate plans don't allow to carry benefits when employees leave the organization.

Onsurity, however, gives them the option to continue their corporate health plan on a monthly subscription, ensuring it does not impact their pockets.

Kulin emphasized that the wellness, healthcare, and insurance features bundled in their plans are more comprehensive than standalone health insurance products. Onsurity's distinguishing feature is its unique Claims Concierge Team, a dedicated group of 40 doctors who assist people during their entire claims journey.

Sticking around investor vs. fair weather friends

In order to build a trustful and sustainable founder-investor relationship, Ganesh's believes its important to engage with founders for a period before investing:

"It is usually healthy for both investors and founders to engage for a period of time to understand each other before investing."

Kulin reiterates the importance of a 'sticking around' investor rather than a 'fair weather' friend.

"A lot of founders mistake that they are the company; the company is not them. The company after a point of time is so much more than the founders."

Kulin acknowledges the role investors play in providing a bird's eye view to the business, sometimes pointing out unseen problems due to the founders' immersive involvement in the day by day operations.

Onsurity's fundraising has involved investors who appreciated their model and, importantly, trusted them. This trust led to the belief in the founders' judgment and their ability to run the company. Ganesh's experience as an operator provided a deep level of empathy, not just sympathy, towards the founders.

We’re all shareholders

Pat also raised doubts about the legitimacy of claiming a segregated approach to investing in multiple ventures. He acknowledged that sometimes things might not always be smooth, highlighting the dilemma of balancing fiduciary duties towards investors while simultaneously supporting founders.

Addressing this issue, Ganesh argued that there's no one-size-fits-all solution. "It depends on the maturity of everyone at the table," he opined, emphasizing the shared ownership and fiduciary responsibilities of all parties involved.

"Remember, we're all shareholders, with responsibilities to act professionally and maturely."

Ganesh further explained that when faced with difficult times, shareholders must collectively decide what's best for the company's future. This could range from pivots, pauses, returning capital to the shareholders, merging, or even taking legal action.

Sounding board

On the topic of building a valuable board of directors, Kulin emphasizes the need for board members to serve as a 'sounding board' for founders. The board should be capable of discussing problems openly, asking challenging questions, and bringing best practices from their broad exposure to other companies and trends.

"The board member isn't questioning you but the situation at hand. The expectation is that together, you can find a way out of it.”

Ganesh adds that the partner who evaluated and brought the investment opportunity to the company typically assumes the board seat. However, the strategy varies with the evolution of the companies and their geographic reach.