Are Entrepreneurs Born Or Made? -An Insurtech Venture Makes The Case For Startup Studios
The entrepreneur of popular mythology is a buccaneering character - ambitious, independent, just a little arrogant and brimming with disruptive ideas. And if you want to dig a little deeper into the stereotype, you might also note that entrepreneurs tend to see themselves as leaders rather than team players. Indeed, entrepreneurs are notoriously reluctant to delegate or trust others - something that often becomes increasingly obvious as a business begins to scale up. Senior people are hired, but they find the founder is reluctant to allow them space.
It’s a very characterisation, of course, but it does contain a large element of truth. You could put it more simply and say that founders start businesses because they want to do things in their own way, without too much input from others.
The corporate world, on the other hand, seems to operate in a different universe. CEOs arguably enjoy something of the same cult status as startup founders, but they are constrained not only by the expectations of investors but also by governance arrangements and long-standing practices and procedures. A CEO may consider himself or herself to entrepreneurial and encourage members of staff to adopt the same mindset, but the truth is large businesses can find it hard to innovate. And when they do, it tends to be a slow process.
A Middle Way?
So is there a middle way? Is there a space in which would-be founders can develop ideas and business plans in the company of industry experts who can guide them through the process of bringing products to market? A space where the entrepreneur doesn’t have to make all the decisions alone?
This takes us into the realm of startup factories or studios. As distinct from conventional incubators or accelerators, these are places where the managers assemble teams of people deemed to have entrepreneurial skills and help them to build businesses from something close to the bottom up. Often the concepts are created within the “studio” itself, rather than being brought in by the entrepreneurs.
Kamet Ventures is one such Startup Studio. Focused on developing technology products and platforms for the insurance and healthcare sectors, the venture was founded by former Axa executives, Stephane Guinet and Nicolas Bosc and Boston Consulting alumnus, Michael Niddam.
On the face of it, Kamet has its roots very firmly in the corporate world. Indeed, standing just off stage, insurance giant Axa has provided 100 million euro to fund the businesses that are developed within Kamet and has an option to invest again if and when Series A and B finance is required.
However, when I spoke to Guinet and Niddam, they stressed that once ventures are ready, they can seek alternative funding from VCs and other third parties if that is more appropriate. In other words, the aim is to create businesses that have the potential to scale up and address problems across the insurtech marketplace, rather than necessarily developing solutions for Axa.
So how does it work? In the first instance, entrepreneurs are selected by the Kamet team. “They are assessed on their abilities,” says Guinet. “Most are seasoned entrepreneurs.”
That doesn’t necessarily mean seasoned founders. Those who come on board might have worked for startup companies as developers or marketing people and may not have a track record of launching businesses themselves. And as Guinet adds, some come with ideas, others will work on concepts developed by Kamet, based on its knowledge of the requirements of the insurance and healthcare markets. However, he stresses that is not a case of signing up people with relevant skills and telling them what do to.
“We offer ideas. But they are free to come up with their own.”
But Kamet has its own way of doing things. All ideas will be tested and many will be dropped in favour of others. So in that respect, Kamet’s entrepreneurs have to be comfortable with a collaborative approach and - equally important - they may have to accept that the idea they started with may not be the one that they ultimately take to the market.
So will Kamet’s entrepreneurs really buy into something that they themselves haven’t conceived? Michael Niddam says this hasn’t been a problem. “Ideas are maybe just 1.0% of the entrepreneurial process,” he says, adding that after several months people tend to forget who came up with the original concept. “They tend to become the ideas. They appropriate the ideas.””
But there is another question. Why don’t Kamet’s founders simply start their own businesses?
There are perhaps a number of reasons. The Kamet management team’s close links with (and knowledge of) the insurance sector provide a base from which to develop customer-centric products addressing real industry needs. .
Samuel Falmagne, co-founder and CEO of Akur8 - a company that applies machine learning to actuarial decision making - says he had to assess the Kamet model before coming on board. The studio’s connections with the insurance industry was an important factor. “Kamet’s industry knowledge is very strong,” he says. “And the association with Axa allowed us access to claims data.”
And - let’s be honest - there is less risk. Kamet pays a small salary to its entrepreneurs until the businesses hit a certain point in the development cycle. This will be appealing to those who want to start and run a company without necessarily having to support themselves through the early days when no revenues are coming in.
To date, has invested in 23 businesses. Once certain milestones have been reached, the newly formed ventures go out into the world and rent their own offices. Once fledged, they may also seek funding from third parties or develop a closer commercial and financial relationship with Axa. There can be a mix of investors. For instance, one portfolio venture, Ibex Medical Analytics, has just raised $11 million to support its cancer diagnostics solution. The funding came from aMoon Ventures, Kamet, Dell Technologies and 83 North.
Akur8 is also raising Series A at the moment. In its case, a decision was made to focus on third party investment to emphasise the independence of the model.
That said, In addition to the 100 million euro in Kamet provided to fund the Kamet model, Axa has invested almost as much again in Series A and B.
The Kamet model won’t be for everyone. Many individuals set off on the road to entrepreneurship because they are passionate about a particular concept or idea. They value independence are prepared to make - and learn from - their own mistakes. But that is a romantic vision. In reality, few entrepreneurs are truly independent once investors come on board. And, of course, making mistakes can be fatal.
Kamet’s approach aims to produce genuine entrepreneurs, albeit through a carefully managed process. For those selected to take part, it's a model that offers an arguably lower-risk introduction to entrepreneurship, along with links to the insurance and healthcare industries.