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Insurance costs for startups grow alongside funding increases

With an increase in venture capital funding, insurance costs can increase by over 150% for startup companies.

“Running a startup in today’s market is filled with risk — good risk and bad risk,” Embroker CEO Matt Miller, said in a release. “Ask many successful founders and they will likely say that they very much embrace risk. That’s because the act of taking risks, intelligently and without fear of truly devastating consequences, is the very basis for progress and innovation.” (Credit: rudall30/Adobe Stock) “Running a startup in today’s market is filled with risk — good risk and bad risk,” Embroker CEO Matt Miller, said in a release. “Ask many successful founders and they will likely say that they very much embrace risk. That’s because the act of taking risks, intelligently and without fear of truly devastating consequences, is the very basis for progress and innovation.” (Credit: rudall30/Adobe Stock)

In recent years, startup businesses have drawn unprecedented levels of investment with U.S. venture capital-backed companies raising $329.9 billion in 2021, but as funding grows for startups, so do the risks and the responsibilities to protect the business and its investors, according to Embroker.

The commercial insurance broker reported that insurance costs can increase more than 150%, depending on the type of coverage, as venture capital-backed funding grows. For example, when a startup goes from a $5 million-$25 million range in funding to more than $25 million, director and officer insurance increase more than 155%.

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Steve Hallo

Steve Hallo

Steve Hallo is managing editor of PropertyCasualty360.com. He can be reached at [email protected].  

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