Tanguy Touffut has gone from corporate to a startup entrepreneur. Raising many millions of dollars to grow a global company that helps others anticipate and protect against climate change risks. His venture, Descartes Underwriting has attracted financing from top-tier investors like Eurazeo, Serena, Cathay Innovation, and Seaya Ventures.
In this episode, you will learn:
- Balancing the interests of the different stakeholders in the insurance world
- How big this insurance space is
- Tanguy Touffut’s top advice when launching your own startup
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Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
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About Tanguy Touffut:
Descartes collaborates with brokers across the world to protect their corporate clients & governments against natural catastrophes, weather, and emerging risks, through a unique data-driven approach.
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Read the Full Transcription of the Interview:
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Alejandro: Alrighty hello everyone and welcome to the deal maker show. So today. We have a really interesting entrepreneur. You know an entrepreneur that went from corporate to entrepreneurship to entrepreneurship. So a little bit of everything and now he’s doing something really interesting around climate change. And I think that we’re all very much you know going to enjoy what he has to say and quite an inspiring story. So I guess without farth and fartherdo. Let’s welcome. Our guest today tangui to foot welcome to the show. So originally born in the eastern part of France. So.
Tanguy Touffut: Thank you for the and invite.
Alejandro: Give us a little bit of a walkth through memory lane. How was life growing up there. Okay.
Tanguy Touffut: Well gra in eastern some part of France in in the 80 s ah poleli gives you some ah perspective about I would say ah how the economy made change over time I would say the eastern part of France was a heavily industrialized. And unfortunately over the last thirty year forty years the the economy has changed drastically. So the impact of I would say ah factories on the production of her of wealth as decreased substantially replaced by c to some extent. So um. Let’s say your gives you a perspective of all the challenges you may ah face if you’re not able to ah keep up with innovation and be able to to meet so I would say googleable challenges.
Alejandro: So so for you, you know? at least you know like in the family did you have like anyone that was an entrepreneur or or any type of exposure to small business or would you say that this perhaps developed over the course of time.
Tanguy Touffut: Knew my father was a vet. So let’s say that for um, for I would say ah doctors or or um, a lawyers. They are quite independent. They have to secure their own revenues and they’re not part of I would say large company. So definitely I would say a search profiles are in but by by construction. So this is something that ah is ah is true for for my 5 follow my family but Noa I would say you there are not so manys in naya.
Alejandro: So in your case I mean you ended up going to University and you definitely studied finance and economics. You know for the most part. So how did you develop that law for numbers.
Tanguy Touffut: Like for me.
Tanguy Touffut: Well, um I think in France um, there are a few ah business schools that could help you I would say join very nice companies. So let’s say it’s it’s a passport to be able to have like a. Management role at some point in your career. So um I think that’s definitely ah something I wanted to do being sure to understand the economics to ah to be able to adapt also to different or challenges and at the same time having this. Basically the credibility to be able to ah to manage companies at some point in in time.
Alejandro: And in your case I mean you you definitely developed the the right type of experience before going at it as an entrepreneur because you had on 1 end the banking side then the consulting side and then the bigger kind of like insurance type of um journey. Before really getting started with with your business now. So one of the things that that is very interesting here is the the consulting part you know and the consulting part but you know I see a lot of people that come on the show that. Really develop that understanding on how you’re able to grab a big problem break it down into smaller problems and then tackling one after the other to really be successful with whatever you have in front of you. So I guess for you that consulting experience what kind of background. Would you say gave you to tackle problem solving.
Tanguy Touffut: I have the the chance to work for oiv white man. So it was a a global consulting firm. So I actually worked in ah, many different countries in North America in Africa in Asia. So um, and most of the time for. Large insurance companies. So I was able to ah better understand how to be how to make money how to be successful in insurance. So for me, it was a a good um I would say a very good experience and they’re useful to ah, better understand the insurance industry. But um, even if um. This experience was ah precious I think the experience within a large insurer was even more important to be able to deep dive and have a very clear understanding of ah the mistakes you should avoid to make in ah as a startup and also um. All the regulatory hudlesles you may face I think you in ah large organizations. You may learn a lot about all the ruless and other conventions that make them successful food and if you’re about to take a step back and understand that you can drag some ruless not all of debits. Some of them to make it something better because what tools are actually ah useful. Twenty years ago may not be I would say useful anymore today if you’re able to to distinguish basically ah the lessons that you have to learn to be a part of a large organization at the same time. What doesn’t make sense. Then you may have to chance to disrupt your industry.
Alejandro: Now here for you I mean you had um, a really good insight into the world of entrepreneurship but doing it without so much risk I mean after the consulting experience you go to Axa. And you spent a you know quite a bit of time with with Axa I mean we’re talking about you know at least day what was that like 6 years that you were with Axa eight years now I mean and um and during this journey you had the opportunity of experiencing different aspects of of of the business.
Ancient step. 8 h years interest.
Alejandro: And the last one that you did that was really what is called the entrepreneurship a route which is essentially being an entrepreneur but under the umbrella of a bigger organization. So in this case for you tell us a little bit about that experience. What happened there.
Tanguy Touffut: I think in large organizations. Of course you have plenty of resources. You also have the knowledge to be able to I would say reach scale relatively quickly. So this is something that is ah 1 of the big advantages of large organizations. Ah, the same time you have more constraints. So definitely you have ah to generate revenues very quickly too. It’s even more important I would say as an income owner compared to an entrepreneur because Cfos may not be ah, patient enough to ah to let the business grow in the long term. We focus on the quick wins and I would say ah short term results. But at least you have colleagues around you that can support you and help you I would say reach the right conclusions. So um, it’s ah it’s a wonderful incubator. Working for large insurance is definitely a ah good place to um to understand how some projects could fail and how some other projects could actually be a big success. So. It’s definitely a ah, very helpful experience I had in my life.
Alejandro: So in in Axa you you develop the global parametrics which is the entrepreneur project that you did I mean you build that up to like 30 people and pushing that nicely so at what point do you realize hey I think I may want to you know branch out and and do something.
Tanguy Touffut: I think um, again, ah you may face some some frustrations as ah, a Ceo of within a large organization. So the the freedom to act of course is limited so and it’s really difficult to um to combine the best of the both worlds so being.
Alejandro: My own.
Tanguy Touffut: Both very agile nimble and the same time being part of a very large family. Some people manage to to do that. But it’s very complex. You need to ah to to to change I would say your your mindset quite frequently whereas as a next external. Entrepreneur Um I would say ah only your clients and to some extent your investors can change your mind. So um, the ability to to act freely of course is ah is ah more important as an entrepreneur than an entrepreneur. But you don’t have the resources. You don’t have the knowledge of others you are on your own with your cofounders that makes a big difference and that also explains why not so many people move from ah I would say you’re a rule of incapronne to a rule of of her Tru entrepreneur.
Alejandro: So what was that transition like at what point do you say hey I think I’m gonna give my notice today. Ah so.
Tanguy Touffut: I think ah, it’s ah it’s known process. It depends on what you want to achieve in life if you if you project yourself in ah 101520 years and you you think that you would not be happy in your future whole. That so you will have in in the fifteen or twenty years within the large organization then it’s time to think about doing something you’re different I think what’s what is clearly important as an entrepreneur is is of course to make sure that ah you will find in your life. Um, um, ah, ah. Colleagues or co entrepreneurs that really help you to ah big but to build something big and I think at that time I realized that ah some people in um, in I would say around me had both the guts and the the willingness to do something very innovative. And very ambitious. So I would say as soon as you have like the the resources and the the allies the friends, the colleagues to achieve that. It’s a very important step and the rest is more like a hard work adaptation I would say a the ability to a. Ah, to get a hit and keep on ah moving forward. So it’s something that is ah is possible but alone of course it’s much more challenging.
Alejandro: You now in your case you know you win at it with this car this underwriting so tell us about how did you think about really like building the team. How did you go about? you know, really tackling it and and and going at it with this opportunity. So.
Tanguy Touffut: for for us we we really want to to be ambitious and ah and to become a next gen copyright insurer so our clients are large corporations usually ah um, they have more than a half a billion in terms of revenues. It’s so global. Ah, company. So today we have officec 4 fish in Usa three and soon fall hiss in Europe and 3 of hisies in aac um, and we wanted to to be global from day one so we have ah today a pally around 25 nationalities in the team um and we have the ability actually to retract lots of tenants from abroad in Paris we are lucky to have ah um I would say a visas for tech pro fives to to get them very quickly in France. So that’s ah. Ah, kind of unique opportunity if we ah if we look at the rest of 20 or or 30 years in France Paris is ah very dynamic. The ecosystem is powerful. So definitely. My first challenge is to find the right people and I was lucky to be able to to find them not only in France or in Europe but across the world. So people from Asia people from Africa people from that time. Um people from the Usa and I mentioned that you need to start with your cofounders first and then the the big next step is to make sure that you can build the a team so the best potential team you can find in the markets and definitely having your. Ah, global reach and the ability just to recruit people not based on their location or I would say they are their language but just based on the the ability to code on pon or other I would say a technical skills. it’s ah it’s a game changer.
Alejandro: Now with this cutus on the writing what what ended up being the business model. How do you guys make money for the people listening to get it.
Tanguy Touffut: So we act as an nga. So basically we underwrite on behalf of large insurers and insurers so we will these workers in the coupled segments broke have a hundred percent of the distribution ah channel so um we we we want to become the best of guys and we are design innovative insurance covers against natural periods so it could be against floats wildfires against hestorms against tonydos against her typically or um. Tsunamesse or earthquakes and across the world. So um, we we really want to ah innovate and and provide the products with super I would say features. So um, as you may know in the insurance sector the reputation of. Of how we are we serve clients is is quite poor. Um, we usually ah when a copy client has a claim it takes in the Usa five hundred and fifty days in our case, usually we process your claim within 5 working days. So it makes a big difference. We need to improve the economics It’s always a mix. To speak about affordability and ah we ah we work a lot on making our products more affordable so we we try to reduce the the fictional costs related to the expense ratio and of course we want to be transparent if we look at covid nineteen. I would say the reputation of the insurance sector was not good prior to to the podemic I would say after the pandemic. It’s even worse so because there were plenty of debates about should insurers pay or should should they not pay claims typically related to business interruptions. So I think we we have to provide very efficient wedings very clear I would say ah um, sentencees and and basically our clients should be able to know if they’re covered or if that covers is something that so looks I would say or I would say obvious in many industries. But today in the insurance sector and even more the case in the cop point insurance sector we cannot say that it’s transparent we cannot say it’s cheap and we cannot say that basically the claim process is a good experience because it’s not.
Alejandro: So now it’s a pretty interesting here because how do you go about calculating or or having a better estimate at potential consequences or impact of of climate change I mean that sounds like a a little bit difficult. So how do you guys go about.
Tanguy Touffut: Things.
Alejandro: You know, really having a good grasp on on such complex. You know situations.
Tanguy Touffut: You’re right? So I would say the the first step is to move from a stook estik approach. So basically looking at historical data to move from this approach to a more innovative 1 based on physics. So of course you need to understand what happened in the past. But for example, if you look at wildfires we may expect lots of wildfires in the nordics in Europe so in nowhere in Sweden and and Finland if you look at the historical data. It did not happen. So some people may conclude that it’s unlikely to happen. But if you measure for example, the sun moisture if you measure the winds share if you measure temperature you see that now the undoling drivers behind wildfires are becoming. Yeah. More and more ah ripe and more and more likely. So um, that’s that’s definitely one of the the first step moving from historical um, an historicalical approach to a forward looking approach. It requires lots of new data sources. It could be satellites. It could be a. Different sense also itogras also ah, new algorithms we may have for example to use ah new old networks to ensure our clients against wildfires we will definitely ah, have to to do that because we are using satellite im imagery. And we’re talking sometimes about plantations with more than 5 or 10000000 of ectackers. So very large plantations and and new technologies are the only way to to do it I could elaborate for hours on on that point on the how to model. Climate change because it’s definitely one of the keto picks for us and this is something that ahsurers are strugglinging with they observe an increase in the frequency of natural catastrophes. It’s a factor of ah 4 to 5 of the last fifty to seven years it’s just the beginning unfortunately and ah. Looking just at at the past won’t be ah enough to understand what’s what’s happening.
Alejandro: And in this case I mean an operation like this is quite capital intensive. So how have you guys gone about racing money for this.
Tanguy Touffut: Yeah, so we we started with a seed so back in 2019 so we had two point five million on usd then we reached ah a bit more than a year later of service a we eighteen point five million usd and then recently so we announced that basically your ah earlier this year ah 20000000 usd seriesb for us at’s c bottom because we we need the global scale. Definitely. We need to become one of the best I would say ah we we need to have the one of the best teams in the world when we talk about so understanding climate change. So um, today we already have 65 people shows dedicated to modeling. Ah, climate risks and we plan to double the size of the team in the next twelve months so we will definitely become 1 of the largest teams in that respect wind of course to um to be able to buy a different detaable system. To improve our understanding and and we need to build a full stack basically ah full stack operations. We need to be able to support our partners through a betterd or I would say a policesuing department. We need to support our partners for. A better claim clementing department. So definitely we need to ah to inject technology across all departments of of the gut. It will take several years to achieve I would say ah what we have in mind. But definitely. We have the resources and. And the the the people to to achieve that.
Alejandro: And so the total amount raised to date has been how much.
Tanguy Touffut: So in total we have phrased a bit more than one forty so one hundred and forty million usd
Alejandro: Got it now in your case, you’ve raised money from from you know all types of investors from people that are you know from europe from other people that have like some roots from the us too. So when you’re thinking about building an operation like this or for example, like being in Europe because there’s a lot of people that.
Tanguy Touffut: He.
Alejandro: Are probably listening to us that are you know European founders. How should they think about fundraising I mean should they think about it globally from right of the bat or is that something that maybe you bake in as as you go.
Tanguy Touffut: I would say it’s it depends on the on the context if we look at our own history. We had to raise drink covid nineteen. So um, it was um I would say more challenging in 2020 year 31 to raise I would say from ah us ah firms because it was difficult actually just to go to the Usa and sometimes impossible so I would say or if you can tap into you are I would say you are. Your local ah venture. Capital market is definitely ah, easier and morechievable when you start growing I think there is um of course um more and more appetites for I would say european tech players from. Ah, both ah asian and North American investors it makes sense to diversify and to if you want to be ah to build ah a global ah platform having your I would say um investors from ah bias regions definitely makes sense. So in our case. For example, we have ah for the lit round 2 2 investors Cia yeah and ah and Ama Mudi being very strong in Liberia but also in that term we wanted to be more um, efficient and grow faster in Latin America of course having some investors having your ah good ah market knowledge some ah contacts on the ground and I would say ah some um feedback about where you should ah I would say you launch your products. It can be extremely efficient. But of course you have to align the the nationalities of um of your um of your funds with what you want to achieve googlely and and we have a a number of different. Ah I mean foreigners in in our. Capable and for us it was the only way again to ah to be a global player.
Alejandro: Now in this case, you know for the people that are listening to get a better understanding on the scope and size of the operation I mean how many employees are you guys already and anything else that you would feel comfortable sharing.
Tanguy Touffut: But today we are a bit more than 85 people. We should be something like ah 130 to 150 by the end of the yearro so many people with generous are in the next few weeks or next month and until the end of the yearro. Um, we um, we have been opening in number aboutcs in the Usa in in Apac this is something that is a priority for us again to to be able to get closer to ah our volrs and to our clients. So this is something that ah. We remain a key prior building a global ah global company. Um in terms of Topline. So we plan to be above hundred million gross written premiums this year so what we call gwwp so that’s a. And the key matric in the insurance. Space. So we need to to double or we we are reached a bit more than 50000000 last year we plan to double this year and we need to keep on going very fast in the next two three years but the same time we need to be reddicid so there is a key. Metric called ah the lost ratio in insurance. So you need to be very fair with your clients. But if your loss rat is too high. You know that at some point in time you will struggle to convincesurers to support your our development. So I think ah. When you create ah an ambitious company. It should be a win-win situation. So of course your ah your um employees should be happy with so the company your clients should be ah I would say ah excited about about your products but all your lie Antiquino case. We’re talking about insurers and reinsurers. Should ah make money and should like to work with you if you’re able to satisfy I would say all the stakeholders then you can really think about building something big if typically your your loss pressure is too high if you’re actually ah asking your venturesurers to systematically. Your premos of course at so time the discussions we stop and you be here in a situation where actually growth is not possible. So that’s really, ah, something we have to keep in mind we we keep on going but we need to ah do it in a very sustainable manner and please ok clients. Employees ah older partners brokers insurerssurers asset managers and of course so investors everyone should be um, should be a happy and thrilled buyer what we are building.
Alejandro: Now Imagine tangui that you that you go to sleep tonight and you wake up in a world where the vision of the company is fully realized what does that world look like.
Tanguy Touffut: Well today it’s 50% you up 50% the rest of the world in terms of revenues and I think in ah in nobel furs. It would be more focused on North America and Asia I still expect growth to come from North America and Asia it would be. Definitely above half a billion in terms of ah gwp so this is something ah we have in mind so in the room term we should be different here above half ah a billion it should be I would say ah the number one in terms of ah climate risks. Terms of how we understand and how we are able to innovate in the face of climate change because it’s ah one of the greatest challenges of humanity. So um, insurers have a big hole to play and today it should ah I think the the road should be ah, definitely um, more ambitious. It’s not about so. Only investments investments are important communication is important awareness is important but definitely there are many things that should should be ah provided by insurers and we want to work on that and then I would say um, we need the of courser to be the preferred employer for all ph ds. Say on software engineers and devops looking for a job in the climate in weather space because when we talk about ah in short tech or or just the tech industry. We’re talking about being able to attract the best talents in the market. And again we are in a position to be able to attract people from latin term from North America from Africa from all over the world.
Alejandro: Perfect. So tango imagine I was able to bring you back in time and put you to a time machine and you had the opportunity of having a chat with your younger self with that younger tangui and ask yourself 1 piece of advice for launching a business. What would that be and why even why you know now.
Tanguy Touffut: I Think the the number one advice is um, making sure to find the right people you want to work with because the the first curist will be extremely tough if you’re not alone and if you can trust other people to ah guide you to challenge you then I think a a bigger. I would say it’s a bigger ah chunk of the the work done. So um, finding the right people to um to to start the company with that’s probably the the number one advice I would keep to to myself.
Alejandro: And for the people that are listening. What is the best way for them to get in touch and say hi.
Tanguy Touffut: Definitely. Ah, it could be on Linkedin or otherwise or through the the company’s website so they got on the writing dot com.
Alejandro: Amazing! Well thank you so much for being part of the deal maker show today. Really appreciate it.
Tanguy Touffut: Thank you
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