Peter Thiel-backed insurance startup Jetty lays off 40% of staff — Business Insider (Apr. 6, 2020)

Summary

A Business Insider article by Alex Nicoll, dated April 6, 2020, reports that Jetty, an insurtech startup that offers a range of products for renters, has laid off 40% of staff, Business Insider has learned. It says the layoffs came days after Jetty and its reinsurance partner Munich RE paused all new policies, and that the company had around 90 employees before the layoffs, which affected roughly 35 employees. A company spokesperson is quoted as saying all team members impacted were notified on Friday and have received severance packages, and a spokesperson said the pause is unrelated to the layoffs. The article states that Jetty has raised $40.5 million in three funding rounds, most recently $25 million in a February 2019 Series B round.

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Finance

Peter Thiel-backed insurance startup Jetty lays off 40% of staff days after pausing the sale of all new policies

By Alex Nicoll

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Jetty cofounders Luke Cohler, President, and Michael Rudoy, CEO. Jetty

2020-04-06T18:24:39.000Z

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Jetty, the insurtech startup that offers a range of different products for renters, has laid off 40% of its staff, Business Insider has learned.

That comes days after the company and its reinsurance partner Munich RE, the second-largest reinsurer in the world , paused all new policies, according to an email seen by Business Insider and confirmed by Jetty and Munich Re.

Jetty offers products including lease guarantees, security deposits, pet insurance , and renters insurance, leaving it on the hook to repay lost rent as unemployment surges due to the coronavirus crisis.

The company had around 90 employees before the layoffs, which affected roughly 35 employees. Dave Soderberg, Jetty's creative director, was one of the employees let go, according to a tweet he posted . Soderberg did not respond to a request for comment.

"Like so many other companies dealing with the impact of COVID-19, we have made the difficult decision to part ways with some of our team members," a company spokesperson said in a statement. "All team members impacted were notified on Friday and have received severance packages. It was a hard day, but these decisions have been necessary to ensure the long term health of the business."

Jetty has raised $40.5 million in three funding rounds. Most recently, it raised $25 million in a February 2019 Series B round. The round was led by Silicon-Valley legends Khosla Ventures and included funding from Peter Thiel's Valar Ventures and fintech investor Ribbit Capital.

Jetty uses Munich Re's Digital Partners arm to reinsure its policies or purchase the underlying policies that Jetty is writing. In an email sent last Monday evening to Jetty's landlord customers, who offer security deposit insurance and pet insurance to prospective renters, the company announced that Munich Re and Jetty are pausing sales of all new policies.

A Jetty spokesperson said that this pause is unrelated to the layoffs, and that the job cuts were planned before the pause. Jetty plans to lift the pause on new policies "as soon as possible," the spokesperson said.

"It is common in times of uncertainty and unprecedented situations for insurance companies to temporarily pause new policy sales," Andrew Rear, chief executive of Munich Re's Digital Partners, said in a statement to Business Insider. "These are unprecedented times. However, we have been working tirelessly with our partners at Jetty to seek a way to underwrite this evolving risk and expect to resume new policy sales in the near future."

Jetty is part of a class of startups that replace traditional security deposits with an insurance product, for which renters pay a non-refundable premium. In Jetty's case, that premium is 17.5% of the security deposit. Other startups that offer comparable services include Rhino, LeaseLock, Obligo, and TheGuarantors .

Legislative energy has been building for "renter's choice" laws this year. The laws, which require landlords to offer tenants security deposit insurance or plans to lower the cost of moving, have the potential to offer a big boon to these businesses by dramatically increasing their customer base . Cincinnati passed a renter's choice law on January 15 of this year, while states like Virginia, Tennessee, and California have signaled support for similar bills.

Most recently New York City Mayor Bill de Blasio and other city politicians have endorsed a rental-relief plan that would allow renters to use their security deposits to pay for a month's rent, preventing renters from falling too far behind. Landlords would then be able to offer security deposit insurance to renters, instead of having to repay their deposit. New York Governor Andrew Cuomo hasn't signaled if he supports the law.

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