The following interview is a conversation we had with Mark Morissette, CEO of Foxquilt, on our podcast Category Visionaries. You can view the full episode here: $25 Million Raised to Build the Future of SMB Commercial Insurance

Mark Morissette
Thanks for having me, Brett. Super excited to get into the dialogue. 

Brett
Yeah, no problem. So let’s start with just a quick summary of who you are and a bit more about your background. 

Mark Morissette
Yeah. Mark Morissette, I am a co-founding partner of Foxquilt and my background actually stems in distribution strategy and billing out some prolific financial services companies that were born and raised out of Canada starting in the early two thousand s with before Fintech was even coined. Fintech at ing Direct. And then I crossed over into the property casualty space working for a CEO of our second largest carrier in 2008 and was proud to become an insurance vertical leader at a tech company. It was born out of Canada, then scaled to an IPL in 2017 called Real Matters. And that’s where we got the light bulb for what would become a blueprint of Foxquilt. There’s no success story is an overnight success story. We incorporated this business in 2016. 

Brett
Where did the passion for insurance come from for you? Is this something you were thinking about very early on in your career? Or was it just really that first insurance company that you worked for and that’s where it developed? 

Mark Morissette
Honestly, my salad was always a very curious, always had the aspiration to become an entrepreneur. So when I was in business school in the late ninety s, I started a logistics company, shipping cars by rail car. And then when I graduated, I was recruited at business school to get an investment banking. I was a terrible investment banker. I got into securitization and mortgage backed securities and headed up a uniform city group in 2006. My crossover, where I fell in love with basically entrepreneurship and developing product and technology with customer first in mind, was in that front office at indirect early days when the banking Valley train is a bit further ahead in adopting digitization and innovative product and distribution. 

Mark Morissette
But where I fell in love with insurance was when I basically fell into the C suite office at a company called Aviva Canada, one of the largest general insurance companies in the world. And back then, 2008 or nine, they were still triaging in bricks and mortar branches customers by color coded paper. There was no capabilities with regards to technology and fast forward. It still has been a fairly paralyzed value chain in the sense that they haven’t attracted or invested in core capabilities with regards to people and technology to accelerate where the market’s demands are. So it’s still a value chain where you see this disenfranchised small business owner. And I’ve focused always on small commercial lines. That’s where I manage some of these different pnls. 

Mark Morissette
And that small business owner is provided with a one size fits all product and they’re trying to make money on the underlying underwriting pool. Good guys subsidizing the bad guys. And you’re limited to basically the choice of filling out a paper application and having these different brokers and agents that you’re fulfilling your needs by a manual basis to spray the market with all these different underwriting companies. And hopefully three or four weeks later you’ll get some quotes back with some pricing, but you really don’t know what you’re purchasing and you don’t have much purchasing power as a business owner. So I fell in love with the immediate need to make impact across a value chain. And I’ve looked at my career, I was like, okay, if I’m going to have a valuable two decades of impact, I don’t really have to look any further. 

Mark Morissette
So I met my current business partner, Crim Jamal, within Aviva, who was a young actuary. And we had the good fortune to kind of basically get our phds in all things insurance and technology, and with the blessing to go build out some different contact centers from scratch, integrate some of this small commercial offering into these contact centers. From 2008 to eleven, before I rejoined my fintech brethren at a company, real matters, where we really got down to work in building state of the art technology. And then Barry witnessed kind of the first generation of Insuretech, what was going on globally, 2010, to call it 2016, before we started Foxville. 

Brett
And how have you seen Insuretech evolve since then? I’m guessing it’s changed quite a bit. 

Mark Morissette
Well, we got into, we said, well, the real light bulb moment came to life for us because were building out a boots on ground. Real Matters is a platform that hosted 300,000 like and kind property professionals boots on ground network, and it serviced two verticals, the banking vertical, to support the mortgage appraisal process, and then on the property casualty insurance side, loss control inspections. And the biggest pain point for us was onboarding these guys across North America. They never had the right insurance policy. Gl Eno with limits in place. And our call out to the marketplace at that time was we figured we’d get some response, but weren’t that naive. It was a multi million dollar opportunity for these legacy carriers. Can you not integrate and embed an affinity solution into our environment as we onboard these inspectors and property professionals? 

Mark Morissette
And we never got a call back. And we looked at that first generation of Insuretech and there wasn’t much ingenuity on the underlying underwriting product. And almost nothing in the back end architecture was all outsourced to these multinational vendors, et cetera. It was really that first generation was founded with principals and entrepreneurs that had strong access to capital because they had strong access in other realms and they were really just acquiring customers on the front end. And so we said, okay, it’s time for insurance technologists to get in the game and focus on the value of building IP front to back, and then a really strong proprietary product and offering that would give that emancipated offering to a small business owner agnostic to where they’re originating from. 

Mark Morissette
Whether they’re a side hustler in their basement as an ecommerce merchant, or whether they’re part of a larger b to b program at an ecommerce marketplace or a contracting platform, or whether that vehicle is opened up to brokers and wholesalers to move their low margin small transactional SME customers in and out very quickly. We said it’s time to basically solve that embedded program solution, but basically create the vehicle, build an arsenal of products, and then gave a lot of self service functionality to a full omnichannel of clients. And that’s what we set out to do. 

Brett
Wow, super interesting. Now let’s switch gears here a little bit, and if we can maybe just dive deeper into the product, can we expand on that a bit more? And just maybe consider this, the elevator pitch. If you’re randomly meeting someone and they say, mark, what do you do? How do you answer that in simple. 

Mark Morissette
Know the product is you look at it through the perspective of the eyes of a small business owner, one to three employees or a sole proprietor. It’s that micro niche segment that’s really not being serviced in the marketplace. And right now and forever, they’ve been basically hosted with a packaged or a one size fits all product. I always turn to the contractor segment and a plumber, electrician or handyman and it’s all lumped into the same product. Well that’s not what they are. It’s just there’s no been technology to boil down and distill and discern exactly what they do. And they’re very proud business owners with very distinct and unique personas. And especially in post pandemic in this emerging marketplace, they do a myriad of different things. 

Mark Morissette
They could be doing 50% of the time doing some electrical work, but they could be doing some commercial painting, some fencing and some handyman work. So they’ve never had a vehicle to build out their own Persona and Ala carte product with a baseline general liability offering and then have it do it 24 711 o’clock at night so they can print out a certificate beyond a job site the next day. But more importantly, it’s about rewarding them with fair value pricing and underwriting adjudication, and creating that intelligent machine to do the work on their behalf. 

Mark Morissette
So it puts them in the driver’s seat and it replaces basically that antiquated value chain where they’re sitting down filling a piece of paper with an agent or broker, and then it’s a spray and freight where you’re submitting that paper application to multiple different underwriting companies and getting this type of one size fits all packaged product with frills that they probably don’t need for their business. And what our product does and affords the same privileges and fair value for a customer wherever they’re comfortable residing to access insurance. Because not everyone’s the same. Some people are very comfortable basically managing their affairs online from their home. Some still require a broker and agent. It’s still a complex offering. They want to make sure and ensure that they’re protected and that they have the right coverage they need for their business. 

Mark Morissette
So that broker and agent has the same access to our vehicle, to the platform and to this multi operational product for their client. And the same goes for look at these big enterprises where the market is going quite quickly, where some of these legacy carriers, if not all of them, have really lagged innovation. It’s about adjoining multiple markets where there’s need. And I always turn to my wife runs an ecommerce marketplace where she’s got 30,003rd party sellers across North America. Two really unique complex regulatory markets. 50 different states have 50 different regulatory environments. And then we got ten provinces of Canada. But her third party ecommerce merchants, they need a cross border solution. They need a ubiquitous product that mitigates their risk for those different cross border exposures. 

Mark Morissette
And these legacy carriers have not created a cross border vehicle or product offering to service the needs of these large enterprises. And it starts and ends with first the technology. You’ve got to own all the IP and the back end sophisticated architecture that can fire out these independent individual pipes around fair value rating, fair value underwriting and then stitch together on the fly a product that’s customized for that unique business owner. Whether it’s tethered into an embedded offering in a large enterprise program, or whether it’s through three or four different channels, they get the one seamless journey to the end result. And that’s about have fair value underwriting and pricing for the customer. 

Brett
From a regulatory perspective, how big of a headache was this to get off the ground and to master that? Yeah, I imagine that can’t be easy. 

Mark Morissette
No, it’s huge. And you’ll see this next generation of insuretech founders myself, and know we have. And if you look at our cross, our broad leadership team, we all have a underwriting and PNC background. Even our heads of sales have underwriting backgrounds. It’s very crucial, important when you’re developing product, the technology and the distribution. And so when we started out our journey, and that’s why we’re a little bit differentiated, because we’ve always been focused on underwritten profitability since day one. And went at it a bit differently. We didn’t go on just hyper scaling the top line and putting on customers on the books and focus on the tech and product afterwards. We had to stay very disciplined to our approach around the integrity of the architecture. It’s all ours. We’ve never used a third party vendor. I’ll get to that. 

Mark Morissette
And then probably a series of other questions, how you find that talent. And then went in the discipline of optimizing our product and our journey with regards to our baseline different verticals around the general liability offering. That’s our bread and butter. We manufacture general liability products, but in 2018 we had to set out to court the big reinsurers that would give us the autonomy and authority to get over these kind of building out that infrastructure and getting above and beyond the regulatory hurdles because we file our own products. So every different us state, it’s very complex because it’s not just about you’re filing product actuarily and so forth and underwriting guidelines so forth, but you’re also servicing that customer and the lifecycle, that policy, not just as you’re onboarded as a net new policy. It’s about changing and endorsing that policy. 

Mark Morissette
If they’re adding a new instrument or endorsement, if they are going to add a different product, they’re going to be canceling, renewing all these different things. Every state down to the font size is very different. So think about how complex, sophisticated and intelligent your machine has to be. Respond to those different needs. Know, state of Tennessee is different than Illinois and different than the canadian regulatory environment. So one thing we’ve always been born and raised in Toronto, Canada is that we always build software product for a ubiquitous north american marketplace. And when you do that, then you have a very scalable offering because you can parachute it in any market thereafter. 

Mark Morissette
So we had to strike the right stakeholders that would give us the autonomy to build and evolve our proprietary products and the infrastructure and the pipes around rating and underrating, and then afford us the autonomy and the freedom to put our customer in the hands of customers wherever they reside. So that always was in the intention of multidistribution in both markets. And it just takes a lot longer to get there because again, we’ve only raised $25 million in aiding currency, by the way. So you have to have real strong integrity in your business model, have this success six, seven years later. And it’s worked because we’ve had strong leaders in the organization who are steadfast to one common purpose and mission. 

Mark Morissette
And you’ve watched this basically living, breathing machine and product come to life and gain favor with so many different customers across three different distribution channels. 

Brett
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Mark Morissette
Yeah, we start with Canada and you start slowly. And Canada is a wonderful, lucrative property casualty insurance market. It’s a bit different. It’s not regulated in the same sense as the US when it comes to commercial lines, general liability, and so you’re not filing product across different provinces, so you can really optimize the underwriting product, your machine and the technology, and obviously your distribution and your customer journey with your UX and UI. And it’s a very profitable market in Canada because it’s not litigious. So you can really comprehend what the customer. And you’re starting it in 2000. Let’s say our first policy was 2018. 

Brett
Really? 

Mark Morissette
Your first lab is getting closest to the customer, direct to consumer. Yeah, it’s the expensive channel. You’re paying Google to acquire customers. Right. But what it does is that if you get your product resonating with that consumer, where they’re coming in and you’re basically getting end to end through the machine in the journey in less than 5 minutes to a layman. And they’re really basically, what we really learned early on is that, well, this is dynamic in the sense they’re very proud and honest about telling us what their Persona is as a business. And we’re collecting really interesting data to ascertain what that rate and what that stitch together what that underwriting coverage should look like and then garner all that experience through that canadian lens and naturally transcended to other distribution channel, broker, agent. 

Mark Morissette
And then eventually where we have really scaled and took off commercially is through their embedded enterprise channel that makes up like half of our business today. So what we did, and we always done this in our past organizations, is that we launched thereafter in the US. We understand the US market in many ways. Actually it’s much closer to home for us. If you look, we reside in Toronto, Waterloo area, our team, and we’re sitting on a peninsula that’s 2 hours away from New York, Pennsylvania, Ohio, Michigan. Like that’s kind of where were born and raised and grew up as kids playing games. We have only traveled a number of times out west. Alberta, BC. It’s more foreign to, you know, that’s always been our market. We’re always taught that’s our local market. 

Mark Morissette
And a small business owner in Erie, Pennsylvania, a commercial painter, there isn’t much different from a commercial painter in Sudbury, Ontario. You look at their needs and if you look at the backstory, we actually took our US innovated product, which is based on US ISO rating and multi operational rating, and that did not exist in Canada. So we actually took a US constructed product with different data pools that we’re using to build that product and we imported it into Canada, not vice versa. So it’s net new in Canada. So in the US, we launched, I think we filed in about 26 states in 2021. 

Brett
Wow. And can you give us an idea of customer growth? And if there’s any numbers or metrics you can share there. 

Mark Morissette
Yeah. Where we’ve grown significantly is we now have basically all that hard heavy lifting and the integrity of the machine front to back. It’s all ours. And this is everything from basically all your different APIs and proprietary wordings and all your rating engine and your auto renewals and cancellation, all that endorsement. It’s very complex work, but it’s done right, so it’s years in the making. And then you open it up and relearn across these different distribution channels where you’re rewarding small business owners whether they’re being serviced through brokers and agents, because our business model is there to basically make their lives easier as well. Brokers and agents, we want to create product for them and we want to create customer journey experience for their customers that is going to create massive economic gains within their business. 

Mark Morissette
And when we really took office through these embedded enterprise channels, there just wasn’t any legacy carriers that could entertain opening up integrated environments and then customizing a tailor made offering for their program of liking kind subcontractors or ecommerce merchants or thereafter. And when you’re not handcuffed to go knock on a vendor’s policy min system or any other vendor’s door, which takes. It’s very expensive to do that. Time consuming. We’re in control. So we can really create value for these large enterprise networks. One, they want to mitigate their risk and exposure and they have tens of thousands of different contractors on the platform. They want to make sure that they’re insured with a ubiquitous product, that it’s seamless and a great experience, and they reward them with a tailored offering that’s fair value to that onboarded network client. 

Mark Morissette
And so we’ve been able to scale up very rapidly. Where you’re writing now, revenue wise you’re writing like a couple, almost a couple of million dollars a month in revenue. And then also now we’ve got 8000 plus clients. So we’ve done all this work with limited capital and I would say that we’ve done it with because we have done and built these things in our past. We’ve attracted really intelligent people capabilities first from a leadership team to the tech and product and the operators. And then you’ve attracted teams underneath of them that have been able to really align to one common purpose and core objectives across the company that have lined. And now we’re on pace to break even by the end of the year. Wow. Yeah. 

Brett
And I think that’s a good segue to talk about money and to talk about funding. So as we mentioned there in the intro, 25 million raised so far. What have you learned about fundraising for insurance technology companies so far throughout your journey? 

Mark Morissette
Well, canadian companies are always at a know. It’s a small, immature, fragmented venture capital ecosystem here in Canada. And again, it’s canadian currency and early stage capital is very limited. I almost equate it to more private equity now. You got to be further ahead. You got to be out of your mvp and almost be making a million ARR before you get a seed round here. So it’s not true venture capital. So you really got to have access to some private capital. And we had good fortune in doing so. But you’ve got to have the integrity from your past to attract talent. And for us, as Canadians, we have to basically measure ten times before we cut once. When we do everything, it’s all got to be measured, right? 

Mark Morissette
So we just can just go raise a whack load of capital like some of our american peers and figure it out along the way. Whilst we make mistakes, we just had to be very disciplined and laser focused around what’s our differentiator. And it’s basically focus your limited capital resources on building the tech in house, in house. And we knew it was going to trade that value when were figuring out what the customer’s needs were. When you wake up and go to bed thinking about the customer and they’re going to tell you what they’re really looking for in the marketplace from these insurance companies, when you figure it out, that’s when the magic gets unlocked and it becomes captivating and compelling to the young innovators that are building it. 

Mark Morissette
Because then they really believe and they want to prove to the market that they’re building something wonderful. That’s just at the cusp of being released to a more global market, raising capital insurance technology, there was a wave of it there that went on, I would say in 2000, I’ll call it eleven to 18, when there was a FOMO and M and a frenzy. Even 2018, 17 to 20. And that first generation, they did a lot of great things about creating awareness that legacies have to get off of their paralyzed hands and get involved and support different innovative teams and models that are constructing these things. 

Mark Morissette
But it also created a lot of, I would say a lot of discouraged type of anxiety around what was the end result, because a lot of them didn’t focus on the integrity of the technology or the product, but they went hyperscaled. A lot of different got into over their ski tips, creating a lot of different product lines and acquiring a lot of customers and forgetting that they were in the actual business of underwriting risk. And so as I call Insuretech 2.0, where we didn’t take that path because we didn’t have easy access to capital. And what that does is that it makes you lean in on your intellectual capital and you solve problems with limited, smart people and you don’t throw money at it. And everything has to be super measured because the canadian capital we do raise is coming from pretty conservative capital. 

Mark Morissette
And so it just means it’s a longer road to get there. But once you do, then who wins? At the end of the day, the customer always wins because that’s what you’re doing. We were the champions of that small business owner. They’re getting better, innovative product that’s tailor made for them. They’re getting self service functionality to own and control their insurance needs. But the shareholder in Foxquilt and the different stakeholders, the reinsurers and capacity providers behind us, they get underwriting profitability. Now, we’ve got a bunch of years in yet. 

Mark Morissette
It’s a small program, albeit, but sizable enough and with some seasonality that we are generating some wonderful underwriting profitability that you can start predicting now, our loss ratios are impeccable and so we’re going to take these learnings and we’re going to create new products with what we learned across different we’ve released 800 different classes, 800 different product classes across three verticals. Personal services, that’s everything from videographers to yoga studios to dog walkers. And then we got a wonderful contractor segment that’s a multi operational contractor product and then of course an ecommerce vertical. We’ll get into other liability products, whether it’s an eno product and the next in the roadmap. 

Brett
Now let’s imagine you were starting the company again today from scratch. What would be the number one piece of advice you’d give yourself? 

Mark Morissette
You know what, I started it as a fairly experienced entrepreneur in my late thirty s. And so at least I had learned a few things and surrounded myself with wonderful people that could help me on the journey. I’ve said this before, I’ll say it again. You have to surround yourself and be open minded to surround yourself with really interesting, curious, diverse people from all walks of life. Because when you’re building technology, when you’re building the product, when you’re building the operations, when you’re forging a board and advisors around you have to have the best rainbow of colors to support the journey. 

Mark Morissette
It’s a long one, it’s arduous and you need the best talent possible in order for you to pull it off because you know, and you’re quite aware, and weren’t naive, that was going to be capital intensive and very hard to build with only $20 million at that time, $10 million at the moment. So people number one, two, I was, and continue to be I was early. A lot of these, we’re talking about raising money, venture capital. They’re wonderful people. I’ve met so many wonderful people along the way, but a lot of them have been queer venture capitalists. A lot of them have been consultants from the big consulting firms. I’m married consultant. So I love them and I have lots of friends, but they’re very parallel to academia and they know what they know and they collaborate, but they’re always behind. 

Mark Morissette
And not a lot of them have actually built product, built technology and built out distribution, or even been part of multinational where they manage pnls, but more importantly, managing large pools of talent and the culture behind it to get over these humps and hurdles and challenges. So they’re limiting what they know. And were always basically told from day one. So if you look at our original blueprint, 2016, I still hold the deck quite proudly. Some of the customers, I had labels on this omnichannel distribution and the stack and that it’s actually come to fruition. We have not pivoted one. I owed it. And why I segued into that is like I was stubborn and disciplined that twofold. I was going to solve that embedded enterprise solution because that’s where it was going to be commercialized and opportunity. 

Mark Morissette
But I wanted to create the simplicity around the vehicle and the arsenal products and open it up to a completely diversified distribution strategy. And I wanted to do it obviously to build that software and that distribution strategy across multiple markets, because then you’ve got potential global scale, but then you’re solving what has not been solved before. This is one of the largest trading partnerships in the world, US and Canada and SME businesses and mid market businesses trading back and forth. No legacy carrier has created a cross border vehicle, facility or product to support that trade. It’s really broken. And so you’re looking at the diversification of how you put your value in the hands of small business owners across multiple distribution channels to obviously diversify your scale opportunities. But also it’s a diversified risk strategy as well on the underwriting side. 

Mark Morissette
So ten out of ten folks were on the venture capital when you’re meeting with them, are like, you really should just focus on the consumer one channel, not all these other channels, just distracting. They’re so wrong. And we’re proving that. And then now 2023 and everyone’s, oh jeez, this is fantastic. You’ve got diversified distribution and you open up the agents and brokers and enterprises. Well, last year and the year prior, it’s not the answer I got from everybody. And then the cross border solution with molding a software and product that works in two complex regulatory markets, again, there’s like just focus on your small market up there and be a first mover and innovator. 

Mark Morissette
It’s really close minded because if you actually have a vehicle platform that has product and it’s basically got this massive need in the market, enterprises, wayfarers and Shopify’s and all these begging for solutions that legacies are not entertaining for their small business networks or for just that hustling small business owner that has had a wonderful relationship with a broker in agent that’s just not getting new solutions for them. You’ve got to open up that vehicle in this new emerging ecommerce world to as many business owners that need your solution. So I was very rigid and disciplined on not being distracted from my intuition and my instincts and my learnings around distribution strategy. What I did my master’s so well. 

Brett
Mark, we are up on time, so we’ll have to wrap here. I love your energy and your enthusiasm for what you’re building. That really comes through in the interview, and you’re clearly very excited and it’s just awesome what you’re building. And I really love the vision and I love everything that you’re doing. I’m sure there’s probably some founders listening in who want to follow along with you and keep learning from you and learn more about your journey. Where should founders go if they want to follow along? 

Mark Morissette
Yeah. Markmorset@foxquilt.com or any of one of our teams. 

Brett
Awesome. Mark, thank you so much for taking the time to talk about what you’re building and share some of your perspectives and lessons that you’ve learned along the way. It’s been a lot of fun. Really enjoyed it. 

Mark Morissette
You bet. Thanks a lot, brat. 

Brett
All right, keep in touch. This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening and we’ll catch you on the next episode.