Functional Finance, a software platform that integrates and automates data and reporting functions for insurance companies, announced today that it has secured $8 million in seed capital, plus $2 million in SAFE notes for future equity investments, which will go towards product development and client relationships. The fundraising round was led by venture capital and growth equity firms New Enterprise Associates, Inc. (NEA), Walkabout Ventures and Altai Ventures, with participation from industry titan Hank Greenberg’s C.V. Starr Insurance and other premier investors.
Rashmi “Rush” Melgiri – a two-time insurtech entrepreneur – and seasoned technology executive Tony DeGangi co-founded Functional Finance in 2021. Their mission is to resolve the convoluted operational processes found throughout the insurance sector following years of experience dealing with insurance technology issues firsthand. CEO Melgiri previously co-founded CoverWallet and is joined by CoverWallet’s former president Jim Ermilio, who now serves as Functional Finance’s President. DeGangi, Functional Finance’s CTO, was previously the co-founder and CTO at Renew.com, an online Medicare brokerage platform.
Functional Finance’s technology easily integrates within the finance tech stack of corporate partners to offer billing/invoicing, premium collection, financing, reconciliation, payables processing, reporting and integration back to the general ledger. The platform provides an automated, seamless connection that offers total visibility at a policy or account level.
“At my last startup I realized firsthand that spreadsheets and emails are terribly inefficient, error-prone and costly ways for the insurance industry to manage their payables and receivables,” said Melgiri, CEO of Functional Finance. “You can build fast-growing businesses and take payments online but reconciling that on the back end is often overlooked and deprioritized, leaving it to intensive manual labor. There was a tremendous opportunity to create an automated technology solution that will make the industry move faster, and the experience should be more efficient and positive for clients and customers.”
As one of the only software solutions exclusively serving the insurance industry, Functional Finance has focused on building its flagship product and working with clients on integrating this seamless, multi-tenant, multi-solution platform. Unlike other software companies that offer efficiencies for a single aspect of financial management, such as payment processing, premium financing or data collection, Functional Finance provides the opportunity for reinsurers, carriers, MGAs, wholesalers and brokers to see the same thing in one place in real-time.
For those industry players who want to avoid back-office issues from the start, integrating the Functional Finance platform is quick and easy.
- Dan Abrahamsen, CEO of Cover Whale, a leading commercial trucking insurance provider: “We are excited to announce our partnership with Functional Finance to provide a new and improved invoicing and payment experience for our customers. Cover Whale has grown to a $300+ million gross written premium run rate quickly and Functional Finance will allow us to continue that trajectory while keeping our internal expense ratios best in class and making things easier and faster for our producer network.”
- Blair Baldwin, Founder and CEO of Boundless Rider, a new MGA in the motorcycle insurance market: “It gives me peace of mind offering our customers and agents an easy checkout experience using the Functional Finance platform. Equally important, working with Functional Finance lets us focus our time and resources on initiatives that drive top-line growth versus the nuts and bolts of billing, invoicing, payables, reconciliation, etc.”
The flexibility of Functional Finance’s platform is built to handle the many operational models in the insurance industry, and the group of seed investors is some of the biggest names in the software and fintech industries.
“The Functional Finance team has created a breakthrough technology that we believe will drive positive experiences and outcomes for the insurance industry, which has historically lagged in adoption of new technologies,” said Rick Yang, Partner, Head of Technology Investing, NEA. “Rashmi, Tony and the Functional Finance team bring valuable experience and a deep understanding of industry-specific opportunities, and we are thrilled to partner with them to modernize insurance data and reporting.”