Today AgentSync announced that it has closed a $4.4 million Seed round, co-led by Elad Gil and Caffeinated Capital. Other well-known names from the Silicon Valley scene took part in its funding round, including Affirm’s Max Levchin and the podcaster turned VC Harry Stebbings, among others.
The round caught our eye because AgentSync is working in a space that has seen a notable wave of venture interest in 2020 — insurtech, which we’ve covered somewhat extensively — and because it shared hard revenue numbers, which we love.
From Zenefits to new beginnings
AgentSync offers what it describes as “compliance as a service,” helping insurance carriers and insurance agencies track insurance broker licensing data. For companies accustomed to doing this work with spreadsheets, AgentSync offers a faster method, built on top of Salesforce’s platform, saving time and lowering the chance of error.
(Tech firms building on top of Salesforce are having a good year, incidentally.)
The idea for the company was born from Sabharwal’s time at Zenefits.
Sabharwal was an early-employee at the infamous startup. To hear the AgentSync co-founder tell the story, Zenefits grew at an inhuman clip, scaling from 100 employees when Sabharwal joined to over 1,700 a year later.
During its period of hyper-growth, reporting later uncovered, Zenefits did not sufficiently appreciate that it operated in a highly-regulated industry. The resulting compliance mess forced co-founder Parker Conrad from the company, with former Yammer boss David Sacks taking the reins to clean house.
At the time of his takeover, TechCrunch reported that Sacks wrote to Zenefits staff that “compliance is like oxygen,” and that without the company would “die.”
Conrad got fined by the SEC, Zenefits cut staff, and had to re-value itself. Sacks eventually left the company. But behind the headlines Sabharwal described work to rebuild Zenefits in a more compliant fashion from the inside-out. Part of those efforts, he said in an interview, was building software that helped track agent compliance, a project that Zenefits later open-sourced and released.
TechCrunch covered the release at the time, writing that Zenefits had built “a licensing compliance app it created in-house to ensure its sales people are properly licensed to sell insurance in a given state available for free to anyone to download from the Salesforce App Exchange.”
The software integrated with National Insurance Producer Registry (NIPR) data, which the co-founder describes as a source of truth in the insurance market. The software allowed users to confirm that individual agents were compliant. The effort bought Zenefits some kudos with regulators, and, according to Sabharwal, other companies looking to use the software.
From the meeting point of internal software project and external demand, AgentSync was formed, with Sabharwal leaving Zenefits to start his company with his partner, Knight. Knight, who has done stints at Dropbox (Head of Business Technology) and Stripe (Head of Internal Systems), worked part-time at AgentSync before joining the startup full-time this year.
Zenefits signed the IP from the earlier project over to Sabharwal before his team wrote any code for AgenySync, allowing the company to get a clean start.
The insurance market is enormous, lucrative, and old-fashioned. That makes it a prime space to attack. The software also helps groups onboard agents, execute what the startup calls “automatically-generated compliance analysis” to help spot gaps and other data errors.
And AgentSync is seeing traction, scaling to $1.9 million annual recurring revenue (ARR) at the time of publication. The company charges per active agent a customer has, with some price tiering based on scale.
Today the startup has 17 people, and is targeting 22 by the end of the year. (It’s investing in its go-to-market functionality post-fundraising.)
On the personnel side, Knight, the company’s CTO, has built a technical team that is majority women, an unfortunately a rarity in the industry. She also said that she’s “acutely aware of the equity and pay gaps that exist for women and underrepresented groups across the industry.”
I haven’t had the chance to talk to too many denizens from the Zenefits alumni, but what’s fun about AgentSync is that it was born effectively out of an effort to fix what went wrong at the unicorn. And, it’s found a market for that fix. Let’s see how far it can get on $4.4 million.