(Bloomberg) — At-Bay Inc., an insurance startup focused on cyber coverage, raised $185 million in a funding round that valued the company at $1.35 billion.
Icon Ventures Inc. and Lightspeed Venture Partners led the round, which brought At-Bay’s total funding raised to $272 million, the company said Tuesday in a statement. The startup also said it will add Icon’s Preeti Rathi to its board.
Large, frequent ransomware attacks in the past year have spurred many insurers to pull back on coverage or raise prices. But At-Bay Chief Executive Officer Rotem Iram said his company has been able to keep the ratio of losses to premiums earned low, and is running a profitable book of business.
The demand for coverage has been increasing, and At-Bay, which started the year with 60 employees, has doubled its headcount and is looking to increase the workforce to close to 200 by the end of the year, Iram said. It recently surpassed $160 million in annual recurring revenue, according to the statement.
“Keeping up with that growth requires a lot of focus and investment, which is the primary objective that we have with this round of financing,” Iram said in a phone interview. “Beyond that, we see cyber risk impacting a large swath of commercial-insurance products, including predominantly professional-liability insurance policies, and so part of the goal of this fundraising is to build a broader range of professional-liability products.”
Cyber insurance can’t be underwritten like other types of policies because threats change so quickly that past losses don’t always predict future trends, according to Iram. Actively probing a company’s security features and routinely checking up on them is the best way to help prevent a cyber attack, he said.
At-Bay generally offers coverage limits as high as $10 million for a single company, and is a managing general underwriter that writes policies backed by Munich Re’s HSB Specialty Insurance Co.
Rathi, who is a general partner at Icon, said she had been looking at the cyber-insurance market for few years before investing in At-Bay.
“At-Bay is building active risk-management tools that have resulted in seven times less ransomware direct attacks compared to if companies didn’t have that,” Rathi said in an interview. “It’s a win-win. If the customer stays secure, they also keep their loss ratios low.”
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