As a tech reporter, you learn that startup founders can find inspiration from just about anywhere. But I’ll be the first to admit that horse trainers were never really on my short list of likely fodder for entrepreneurial aha moments.
Then I talked to Cole Riccardi, the CEO of Authentic Insurance.
Thoroughbred horses—the 1,000-pound athletes that compete in races like the Kentucky Derby—can seriously injure a human taking care of them when they become unruly, leading to a nightmare of a workers’ compensation claim for the horse trainer in charge of employing the caretakers. But an insurance program called a captive changed the rules of the game: This captive, called Big Stakes, incentivized New York-based trainers to maintain safety protocols by giving them a slice of the funds that aren’t spent paying off claims.
Riccardi’s family became involved in Big Stakes in 2019, and it was this insurance model that inspired Riccardi to create Authentic Insurance. Founded in 2022 but available to customers for only six months, Authentic applies the captive model to software companies. Riccardi’s startup handles the logistics of setting up this kind of insurance program, so software providers can offer the service and share in the profit, similar to what Big Stakes did for horse trainers.
Take for example Mindbody, the scheduling and business management platform used by more than 45,000 gyms and beauty studios across the U.S., including Orangetheory, Barre3, and Drybar. Each individual brick-and-mortar location needs insurance. Authentic partners with Mindbody to create an insurance program in which studios that use Mindbody software can also purchase insurance through the platform, rather than buying from a big-box carrier.
“Why should you need to purchase insurance through Liberty Mutual or State Farm?” Riccardi told Fortune. “We should have programs with other platforms that we know and trust.”
Authentic splits the upfront fees it generates 50/50 with software providers like Mindbody. And after it pays out all insurance claims, 80% of the leftover funds go back to the software companies, which can choose to keep the funds or return them to individual businesses. Riccardi’s company keeps the remaining 20%.
Following a $5.5 million seed round in 2022, Authentic has raised $11 million in Series A funding, Riccardi exclusively told Fortune. New York-based early stage venture capital firm FirstMark Capital led the round, with additional participation from Slow Ventures, Altai Ventures, MGV, Upper90, and Commerce Ventures.
“They can take advantage of that customer relationship to deliver the same kind of insurance coverage at significantly better economics,” FirstMark partner Adam Nelson told Fortune. “Cole [Riccardi] is such a unique blend of product visionary, deep industry expertise, and analytical capital markets know-how that let him get from zero to one here, which surprised everyone we talked to in the market.”
Riccardi, 30, is a New Jersey native who now lives in New York. He met his cofounder Kyle Babirad, who specializes in insurance pricing, while both worked in the insurance industry. Riccardi spent five years as an investor at Aquiline Capital Partners, and many of the insurance tech companies Riccardi had been looking to invest in had hired the consulting firm in which Babirad was president.
Authentic has doubled its headcount to 16 since January, and it plans to hire more engineers to build out products, Riccardi said. The funds will also go towards new product offerings, including workers’ compensation, health insurance products, and benefits.
In addition to partnering with Mindbody, Authentic works with restaurant management software Restaurant365, barber booking app theCut, and gym operating system PushPress. Riccardi’s company has sold more than 100 policies through its partners but expects to sell more than 1,000 by the end of the summer.
As for Riccardi’s connection to horse trainers, he credits Big Stakes for inspiring him but plans to stay in his lane by selling to software companies—not horse trainers. There can be more than one winner in this race.
Rachyl Jones
Twitter: @RachylJones
Email: rachyl.jones@fortune.com
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