About Shepherd

Shepherd is a YC and venture backed InsurTech startup for the commercial construction marketplace. We're founded by entrepreneurs with deep domain expertise in construction, tech, and insurance.

The construction industry is one of the largest and most important industries in the world. It creates the physical spaces where we live, work, study, and entertain. Inherently, construction projects are high risk. The complexity, scale, and inconsistent nature of most projects make it difficult to predict outcomes. As a result, the role (and cost) of insurance in construction is outsized when compared to other industries.

We’re starting by creating a digital, web-based experience for buying insurance. Over time, we’ll begin to break the traditional underwriting mold by leveraging data and technology to better understand, predict, and price construction risk.

Shepherd's mission - improve the safety and productivity of the construction industry by advancing the use of technology on job-sites.

Our thesis

If you walked onto almost any commercial construction site 10 years ago you'd be hard pressed to find any devices that actually connected to the internet (aside from a few laptops plugged into ethernet inside the job site trailer). Today, on any given project, there might be dozens of connected software and hardware products helping contractors collaborate, track, and document their work.

And the byproduct of all these new tools is data.

How did this change happen? In this last decade, over $5B+ of venture capital has been invested into advancing construction technology in order to make projects safer and more efficient. Adoption of these tools among contractors is growing exponentially each year. But the underwriting models which evaluate and price construction insurance have failed to evolve alongside.

That’s why we are building Shepherd. We believe contractors should be underwritten not only based on the nature of their work, but also the behavioral data that exists about the way they deliver projects.

Why we're building this now

In short, there are two tailwinds that make the timing for Shepherd ideal. The first is the aforementioned explosion of available data about contractor behavior, project delivery, construction financials. The adoption of construction tech to track, document, and improve projects is still relatively recent, particularly in the middle market and SMB. It's no surprise that this data has not yet been effectively leveraged into supporting financial services.

The second important tailwind is the hard market conditions which currently exist in construction insurance, particularly in excess casualty.

In recent years the Property & Casualty insurance industry has been increasing premium and rates while also tightening available capacity. Largely a response to rising loss costs, commercial lines are seeing their fastest rate increases in 20 years.

Excess casualty towers have become increasingly difficult to fill as it’s not uncommon for contractors to pay the same or more premium for 30-40% reductions in limit. Umbrella and Excess rate increases were over 40% in Q3 ‘20 and approached +30% in Q4.

In short: contractors are experiencing dramatic increases in their cost of insurance but are not receiving commensurate increases in value or innovation. They're effectively paying a lot more in premium for the same (or less) product than they were receiving just a few years ago, with limited advancement in processes or services.

Final thought: closing the underwriting / tech gap

The relationship between construction tech companies and insurers is backwards.

Having personally lived on the tech side of the industry, we know how difficult it is for many software companies to engage with insurers or brokers in a meaningful way. Over the past few years it's become increasingly popular for tech companies to provide discounts in exchange for distribution across insurance channels. This type of relationship may seem beneficial on the surface, but it's the wrong alignment of incentives.

We believe in a world where insurers would be willing to discount their own products in exchange for their insureds leaning in on the best construction tech tools. By elevating the "best" tools (i.e. those with biggest impact on safety, loss control, and claims) insurers can incentivize tech companies to spend their resources on improving their own tools with advancements in product, features, and capabilities. A race to the top, rather than the bottom.

What's next for Shepherd

At Shepherd, we're focused on 3 things:

1. Identifying long term capacity relationships. We're partnering with risk capital providers interested in sustainable, profitable businesses.

2. Partnerships with the top construction tech providers. Focusing on tools which create the most value for their customers when it comes to risk management and loss control.

3. Building our product. With our products at market, Shepherd's platform will span from submission-to-quote and quote-to-binder. We plan on delivering an entirely digital experience focused on efficiency and speed at every step of the process.

If you're interested in learning more about Shepherd please feel free to contact me at justin@withshepherd.com