David Fontain On Raising $59 Million To Provide A Path To Lower Incident Rates In A $8.2 Trillion Market

David Fontain has now raised almost $60M for his startups, in a huge industry that needs more help and innovation than ever. His venture Safesite has acquired funding from top-tier investors like Builders VC, DG Ventures (Digital Garage Group), George Kaiser Family Foundation, and OMERS Ventures.

In this episode, you will learn:

• Startup fundraising
• How big David’s companies have scaled already
• The future of business insurance

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About David Fontain:

David Fontain is the CEO at Foresight, the first insurtech specializing in commercial coverage for the hard-to-place middle market. The company’s mission is to improve every business it underwrites, starting with workplace safety. Foresight is a workers’ compensation insurtech that ties safe work practices to insurance savings.

– Led Foresight business strategy from concept, launching an innovative workers’ compensation product across multiple states
– 17 years of experience in finance, technology, and entrepreneurship, including new product and service development
– Published workers compensation and insurtech thought leader; speaker at ITC 2021

David co-founded Safesite with his partner, Peter Grant, who serves as CEO of Safesite.

Connect with David Fontain:

• Crunchbase
• LinkedIn
• Twitter

Read the Full Transcription of the Interview:

Alejandro: Alright hello everyone and welcome to the dealmakerr show. So I’m very excited today with the guests that we have joining us I think that we’re gonna be learning quite a bit on building and scaling companies and we’re definitely gonna be having the battle of accents here. You know with the spanglist going on with the australian you know accent.

David Fontain: I.

Alejandro: Into but no doubt you know we’re gonna get quite inspired with his story. So I guess without farther ado let’s welcome David Fontain:e welcome to the show. So originally from the gold coast yeah there in Australia so give us a little bit of our walk through memory lane. How was life growing up.

David Fontain: Aliandro a pleasure to be here. Thank you for having me.

David Fontain: Yeah, it was yeah I mean it was a fantastic place to grow up. It’s one of the it’s I mean some of the most famous speeches in the world for surfing. So Anyone who watches professional surfing. They’ll be familiar with the very familiar the Gold Coast. It’s got some fantastic world famous waves there that are on the ah the world. World tour of surfing so actually grew up close to the beach and was lucky enough to you know, spend a lot of time outside and really enjoying that that that lifestyle. So ah, it was a great place to grow up lot of opportunities and great place to live.

Alejandro: And in your case after you went to college you got into investment banking I mean how would you say that that that that experience shaped the way that you look at business and also the way that you also. About Pattern recognition on seeing what works and what doesn’t work when it comes to business.

David Fontain: Yeah, so you know out of out of college moved worked for a Dutch investment bank for a number of years and really just wanted to be on my desire of actually graduated in finance and a big desire was to really understand. How the economy works how money works as a young person and how um you know how how financial markets work and so working. Um I mean getting a job at an investment bank straight out of college is is a great way to but be thrown in the deep end into all of that. Um and start working you know from a. And really understanding those macroeconomic factors how they impact things like global economy. Um and just business in general really got to see a lot of great public companies. Um and and gain an understanding of what you know what an Ipo looks like for those companies and. You know how how how the investment world works and I think it really set the foundation for myself to you know, become an um entrepreneur in the future and it was it was a great you know? Great! Great foundation for for me in in life and highly recommend it to anyone who’s interested in that as as a young person it was.

Alejandro: So at what point do you realize that the corporate is not for you and that it’s time to test new Horizons. So.

David Fontain: It was super worth it.

David Fontain: Yeah I think anyone you know anyone who’s an entrepreneur definitely feels that itch at some point where you want to be doing something more and you really want to be making something big and it’s quite often. You know working in a large company or you know a large investment bank. For example. It’s it’s tough to get things done outside of the you know the business model. Um, and so but definitely filling that itches at a at a younger age and after a couple of years of working in investment banking decided to leave and and start pursuing. Ah. A career in in technology as an entrepreneur and so the first business I started was actually you know going through college I did some time abroad and actually spent some time in in China in Beijing and the first business I actually started after leaving the investment bank was a. A custom business shirt company where you could online. You could design a business shirt and have it manufactured in in beijing at the ah at the suit markets that I used to that I had some connections with from from spending time there in college and so that was my first business. Um. Yeah, launched that business and and sold it actually to to a connection of vine and then moved on to the next thing which was a a software company and I was actually ah making making enterprise software for for for a couple of years there for some so. C 1 companies in Australia which was which was fun.

Alejandro: And that’s actually the segue into Safeside which was you know like you’re real. You know first day company. Um, so so tell us about how that they really you know came to light and and what were the sequences of events that needed to happen for for safe site to come to life.

David Fontain: Yeah, so you know ah I was onto my think the second or third company by by this time and a friend unfortunately that I’d grown up with and spent some and went to college with that was actually unfortunately killed in a workplace accident. Um, which was pretty. Pretty pretty shocking like given our age you know my age at the time which was I was in my late 20 s um and I had another friend that was also from the gold coast also went to college with this friend friend the 3 of us were were good friends and we were both kind of taken back by the loss of this this guy. And it was super untimely like you know in Europe in your later twenty s and yeah early part of your life and to lose your life in an accent. It was completely preventable. Um, you know had had the right guidelines and measures being put into place at this workplace. It was pretty shocking for for both. Myself and my friend who also knew this guy. Um, and so we we put our heads together. We’re both. You know we were both really close friends and we were also you know this up this other but this other friend of mine who became my cofounder Peter Grant is his name. Um, we. Would yeah I’d say it’re both entrepreneurial definitely in nature and we put our heads together with the mission of hey how can we create a system. How can we utilize technology to incentivize and encourage businesses to improve their compli their levels of compliance their levels of risk management. The levels of safety. Um. So that you know ultimately we can prevent things like this happening to what happened to our friend. Um, and that’s when we created basically the safe site which is which was our answer to utilizing mobile technology which is this is around the time of 2014 2015 so mobile take. Mobile technology back then was just making its way into the workforce. You’re just starting to see you know workers use tablets on job sites or you know in a manufacturing plan and you know it was when smartphones were kept becoming acceptable in the workplace. Um, and that’s when we really saw ah a. Key point in time that hey we can create a technology here that uses these smart devices that are all connected to better orchestrate and improve the levels of risk management and mostly incentivize companies to improve the levels of safety and compliance and that’s when we created safe site. We created it back in Sydney Australia we were both living there. We’ve launched it and pretty quickly we had ah a bunch of users in the us a bunch of companies started downloading it off the app store and started using it very frequently. They were. They are our highest users by far. Um.

David Fontain: And pretty soon we found ourselves flying out here to to California in particular to figure out exactly why hey why are these businesses. Why was there so so much need for for improving risk management and why were they using it so much and that was the start of the journey that um. Again, safe site is a company and you know we scaled that into a couple of thousands of that scaled into thousands of companies across the us using the system at the time and that’s what started our and largely started our insurance journey at that time.

Alejandro: Um, and and with safe side how much how much capital has the company raised today.

David Fontain: So Safesite. Ah is is now a technology that foresight which is the company that I’m Ceo of ah is utilizes and is our primary technology that we deliver to to policy holders. Um, so both companies are are owned by the foresight group. Yeah, which is our which is our parent company and the foresight group has raised 59,000,000 to date.

Alejandro: Got it now take us through the journey of of of branching you know into into foresight. You know like what’s the why did you guys think that was the way to go and and how how did that happen. What was that they that those sequence of events.

David Fontain: Yeah, so I’ll take it back all the way back to when I mentioned before when we have launched this technology and just and started to get a lot of us companies using it. Um, you know we were flying out here. Conducting you conducting user interviews and largely shadowing people around the workplace. Observing them use it and trying to figure out what the pain points were and why why there was such an ambition here and pretty quickly pretty evidently. Ah, it was you know insurance costs and what happens when you know the litigation system over here in the us and the result of. You know when when a client a worker is injured and a claim is made what happens to the to the insurance premiums in terms of the yeah severity of increase. Um, and that was you know it was pretty resounding that most companies we were talking to were looking to improve their their compliance risk management because they were looking to save. Ah, what they’ are paying for workers compensation insurance which is quite high. You know the us has some of the highest costs of insurance and in particular highest cost of workers compensation insurance in the world. Um, and so these businesses that were using our so our risk management tool. Was really that the the ambition was really ah down to hey I need I need to save money on my insurance and so I’m looking to use your tool to improve to improve safety to improve compliance and lower my claim rates. Um, and so. You know that that started our journey like I mentioned before that started our journey and insurance where we we went from that to um, you know that largely led us to believe hey wouldn’t it be great if we could become an insurance company and you know create this engage and save model as we call it. That’s the you know the the concept we came up with which is. Getting businesses to engage in things like Osha compliance safety management risk management and get directly rewarded for that you know similar to it’s a model that’s quite quite popular these days like when you think about. It’s in in the health insurance space with people wearing you know fitbits and and saving on health insurance or in the driving space where you can use telemmatics to demonstrate safe safe driving and while you’re auto-premiered. Um, yeah I think a lot of us thought about it at the same time and we were thinking about it largely around ah commercial insurance and how um. These core industry businesses like construction manufacturing agriculture where compliant osher compliance safety management risk management. So important to these businesses wouldn’t be great if we could give them a way to save on insurance by both improving their risk profile improving conditions for the workers. Um, and.

David Fontain: Getting rewarded for the you know the work they do every day to make that make their business better. Um, and so we we came up with that concept back really like way back in 152 and that led us to actually get into an insurance accelerator over here. So we left we left Sydney australia we traveled over to california and we we moved to san francisco and we got into an insurance accelerator called plug and play. Um, which is down in sunnyvale here and up in northern california and you know we we learnt a lot in that six months of being in plug andplay like we met a lot of people from the insurance industry. We pitched our dealers to a lot of you know, incumbent carries to reinsurers to to brokers and pretty quickly gain an understanding of the landscape and what we would need to do to. You know, realize this vision of this engage and save insurance model. Um, and you know through years of refinement. We know we opened up a small commercial brokerage. We were brokering insurance to um to commercial cut to the you know companies in these core industries that we were targeting and that was really. We we didn’t want to become insurance brokers that wasn’t you know our vision. It was really just to understand hey what what would the ultimate workers compensation insure tech product look like like how could we? How can we? best help brokers help their clients improve their risk profile lower their lower their claim rate. And ultimately lower their their premium. Um, and so we operated as ah, you know like I mentioned we that evolved into a brokerage model where we often operated ah a brokerage for a number of years sandbox. What? what? what became foresight which was what we you know we consider our ultimate business model. We are actually underwriting policies you know we’re we’re able to directly offer incentives for companies to engage in osure compliance and risk management and yeah, we were able to launch foresight in october twenty twenty and that’s when we we underwrote our first policy and you know that was roughly when you think about it. You know, 11 years after we came up with this idea of engage engage and save and so yeah, we spent those years as as I mentioned largely spent refining the product making our technology better and also really sent learn getting a really deep understanding of the insurance landscape over here and you know having to walk and walk and breathe in the shoes of a broker. Commercial broker to really understand what incumbents were doing. You know what technologies will they offer how are they helping insured and you know out of all of that we learned that there was a huge opportunity here and businesses were really we we gained a lot of conviction around how much businesses wanted this technology and and were open to this value proposition and.

David Fontain: And the rest of his history. You know we opened. We wrote our first policy on October Twenty Twenty you’ve just been going from from strength to strength ever since.

Alejandro: And going there to to San Francisco I mean to to the Silicon Valley area I mean it’s obviously a different different geographic location for you guys different culture different everything no obviously plug and play I’m sure that it made the landing a little bit softer. But I’m wondering how tough was the whole fundraising process. You know coming from from Australia now the us new connections new everything so how did you guys manage to raise the capital for for the group.

David Fontain: Yeah, so look. We just hustled our our butts off. Basically you know I remember we we in the first two weeks of landing here. We just lined up meetings with everybody and anybody we could network with and that wasn’t just out there trying to tap vcs on the shoulder. You know we were really looking at. Other founders of other companies in similar sectors that we could. We could develop relations with and learn how they you know they were able to successfully raise capital potentially you know, get ah, get some support and you know we we found that there was a really warm welcoming very quickly. We were able to. Establish relationships with other other founders in the same position we were in that that you know some of them had raised large amounts of capital and some of them. Ah, you know were american and had been to notable universities like Stanford or um, you know, just it was there was a mix of basically meeting anyone and. Everyone that we could that could help us achieve this vision and we found a lot of support. You know a lot of people. Yeah, we made some made some really long-term friends and and connections that were still close with close to you know, even seven years later five seven years later still very close to them. Um, and and. You know through making those connections where I was able to get introduced to investors and get you know so guidance and make make advisors. You know we we we went through a cycle that I think it’s really common for a lot of early stage companies and that’s basically finding anyone you can to um you know. Funding those early stage advisors who can really help you meet earlyt stage investors and and refine your pitches I’m sorry I got my dog in the background. He’s ah he’s so apologies for but distracted. Yeah, but yeah, and and through that you know we were able to just basically hustle hustle our butts off and.

Alejandro: Beautiful.

David Fontain: Make connections and find Angel investors and then moved on from that to seed and series a and just basically step by step built built the investment case and really built out the ah built out the model.

Alejandro: Now was said the a little bit more complex. The race that you guys were attending to do because he was more for a group versus just being for a specific entity. Okay.

David Fontain: Yeah, so I think you know we we started off with the the risk management technology and the the early stages of of funding was you know I would say the seed and ah the angel and seed rounds were very much hey we’re onto something here here’s our bigger is our bigger. Um, you know business thesis but you don’t really just walk. You know it’s really hard for anyone to walk out on the street and say hey I’m going to start an insurance company. It’s it’s a huge high barrier of entry. Highly regulated. Lots of capital restraints. Um, you know, complex business model and so it’s it’s something that we gradually stepped into and you know just basically proving out piece by piece. And so in the early days. It was very much we we basically took capital into the risk management technology because our thesis was hey we know this technology works and businesses like it and they want to adopt it and we’re we’re seeing results. We’re seeing some fantastic reductions in things like incident frequency. Um, and these proof points that we’re able to leverage over time collect more data and slowly build that case up where we could say okay now now we’ve been able to prove that this technology works that you know we’ve been able to get hundreds of companies to use it and and collect all this data and prove the benefits of their use. Now. We’re going to start working with insurance now. We’re going to start, you know, brokering the technology like start brokering insurance policies bundling our technology and prove out that it works in an insurance relationship and you know like I mentioned we did that for a number of years and that was largely. You know, still raising money. Underneath ah underneath a w risk management technology umbrella um, and that that got us through to our series a when we had actually been able to you know, prove out everything that we needed to prove. We had years of data millions of data points. We had some really good you know industry studies. Proved that had hard hard data. You know on on us being able to reduce incident rates. Ah dramatically and you know armed with that we were then able to approach the insurance world and you know some of the the biggest global reinsurers and get them on. Get them on side get them to believe in our ability. Plus make some really great hires. You know hire some really great ah, insurance veterans that have been around and had worked with startup insurance companies before or you know created insurance programs that big insurers bring them on side and really. Start tap start raising money as an insurance company and that that happened in our series a um and then from that you know we’ve raised obviously a successful series b um, and that’s how we’ve been able to really prove out the business incrementally to get to where we are now which is like I mentioned before was our was our ultimate business model.

Alejandro: Now for the people that are listening to get an idea of the scope and size of the operation anything that you can share in terms of number of employees or anything else.

David Fontain: Yeah, so as of today I believe we’re at one hundred and thirty employees um and you know we we we start we started it. Ah I think coming into if I recall in 2020 you know we were 30 employees at the time of our but you know when we when we. Left 2020 Twenty Twenty One about the time we launched the insurance operation. So since launching the insurance company. We’re the underwriting you know unit we’ve we’ve scaled pretty significantly. We’re we’re we’re in 8 currently operating in eight states. So we’re we’re we’re issuing policies in 8 states. In the southwest largely around California and Texas um in the first year of of launching foresight. We had um, over one point four billion in in submissions through our platform through our insur tech platform. Um, and that was largely driven through some of the kind of through some of the largest us commercial brokers commercial insurance brokers in the country um who really ah took to the value proposition. We were offering. So um I think a big part of. Having so much traction so quickly we spent so much time refining the value proposition and really making sure we got it right that when we launched it. Ah we had so many brokers ready to go saying. Let’s go this sounds amazing like I’m so excited to be able to deliver technology to my. You know to my customers that’s going to help them not just you know, not just pay claims. But it’s going to help them improve their business. Keep their workers safe. Ah we went into. Obviously you know that was mid pandemic and there was ah you know that was just making the labor shortage even worser even worse. And so when you think about the core industries that we we focus on agriculture manufacturing construction. You know they’re all industries that are really suffering have been suffering since the pandemic and have continued to suffer just due to labor shortages you know, but just can’t get people enough people skilled labor. And you know one thing that amplifies it even more is when those workers become injured then they’re unable to work and they’ve got no one to replace them with so really I’ve got you know the value pro proposition that we were offering and launched with was um, the response was amazing like is really solving a big problem in in the in the Especially yeah in the commercial insurance world for these businesses and as soon as we launched it like I mentioned the brokers were just so excited to be to be offering something new to their customers.

Alejandro: Now imagine you go to sleep tonight David and you wake up in a world. You know where the vision you know of the business is fully realized what does that world look like.

David Fontain: So I would say you know it would be a world where the pricing of insurance um is a lot more dynamic and a lot more flawed and so ah, yeah, a lot that a big big issue that we see in the way that insurance is priced here for businesses. Is that like I mentioned before they’re paying some of the highest rates for insurance globally um and the and the business is the way it’s being priced. It’s also very lagging. So what I mean by that is that if you’re a company and you may have a clean loss history right? You may you may have operated a fairly good business. For a number of years and then all of a sudden you may have an accident or you may have a series of events at work that you know cause cause your workers get injured. You may have a series of claims that can that is a potential to spike your insurance premiums. You know up to two hundred three hundred percent ah you’re already paying the highest the highest amount in the world for for this commercial for commercial insurance coverage and then you’re going to pay 2 to 300% more and then for that rate to adjust for it to go back to where you were that can take 3 years because it takes it takes it takes up to 3 years for and what’s called an Xmod or an emod experience modifier to adjust in this country. Um, and so that business is being punished for the next three years effectively and so much so it can actually cause companies to do yeah have to to become to be rendered uncompetitive or to be. Face fate. You know, forced into you know, deemed uninsurable basically and they’re forced into what we call markets of the last resort and those are those are basically things like state state carriers or state funded carriers where arguably the service is not as good as the private sector or that yeah they’re not as efficient. As well as there’s you know they may they may even be forced into what’s called a employee leasing company where they basically they have to get another company to employ their staff because their insurance costs are too high so you know these are those aren’t great situations. And so what we you know in a perfect world. What we imagine is basically we can give the bit we can give businesses the opportunity to demp to be proactive to demonstrate that they’re a good business on a daily you know on a daily level like be able to. So be able to show that hey I’m engaging in safety management employee training in risk management. My ocean compliant I’m on top of my ocean compliance I’m doing all these things and get rewarded for that and you know have their insurance premiums reflect that in a cycle of you know weeks not years and which is that’s you know.

David Fontain: Providing a lot of relief to these companies for doing a good thing for for being largely proactive in in helping keep their workers safe. Um, and so that in in you know in our in my mind that would be a perfect perfect situation and perfect world and and what we’re largely looking to Achieve. Um. And you know that would just and it just goes. It’s just in the way we see it. You know insurance is more than just an entity to pay Claims. You know what? what insurance should be doing and this this gets into embedded insurance and ins ensure take two point Zero. You know the future of insurance. But basically you know we should be creating incentives. To help yes to Pay. We need to pay Claims. That’s just that’s what an insurance company needs to do. But yeah, what we can a greater calling there is to actually help improve businesses to improve their risk profile. So you know? yes we pay claims. But we’re helping them incur less loss which works out for everybody make the nots good for us. For the client Everyone wins. Um, and so do the workers and so that’s really what we what we see ah as ah as a greater calling of insurance is to really empower businesses to become better.

Alejandro: Nice now, let me ask you this David so imagine if I put you into a time machine and I bring you back in time you know maybe to that moment where you are still working as an investment banker and thinking about like. A world where you were going to be building your own stuff you know and being an entrepreneur on your own imagine if you were able to have a sitdown without younger David and you could give that younger David one piece of advice before launching a company. What would that be and why given what you know now. Yeah.

David Fontain: I think by the the biggest the you know one of the biggest learnings that I think I’ve taken away from being an entrepreneur for so long is basically um, you know who you surround yourself with is everything and and really it’s like there’s no harm. In reaching out to people for advice for help to you know to to be mentored basically like the the the smarter people you surrounde yourself with the better the faster you’re going to iterate ideas the better feedback you’re going to get and the less time you’re going to waste. Potentially pursuing something that might not make sense and if someone who had more experience or you know more tenure looked at it and would be able to tell you straight away so it would definitely be hey forget like um, you know, but you know forget trying to just like. Break your neck at all costs to make something work like you’re better off surrounding yourself with with good advisors and like really thinking? Yeah, having having solid networking support around you. That’s that’s one of the first things I’d do before sort of pursuing different business ideas trying to find a few customers. Um. But yeah, and just like it takes time like everything you like it’s it’s you when you hear when you hear when when most people will hear about a business That’s highly successful. You know they hear about that billion dollar valuation or they hear about you know the the $500000000 round. You know it seems like it happened overnight but quite often. There’s like a 10 year story behind.

Alejandro: Yeah.

David Fontain: Ah, business like that. Um, and so you know it it just take you people do people do hit goal you hit oil. You know they do strike all sometimes and they might be sitting on an idea and in two years time. It’s a billion dollar company that does happen. But I’d say 9 times out of 10 it’s ah it’s a long journey. It’s a marathon. Not a sprint. So um, yeah, it just just. It. It takes time just that’s another thing that I’d I’d tell myself.

Alejandro: Very profound so David for the people that are listening. What is the best way for them to reach out and say hi. Thanks.

David Fontain: Um, yeah, like like ah ah, Linkedin’s good I’m I’m on there all the time for sure. Just ah, give me send me a message or send me connection request and yeah, ah, quite happily chat to.

Alejandro: Mason. Well David thank you so much for being on the deal maker show today.

David Fontain: Thanks Alexandro was great to be here.

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