Ep 21 – Bringing Insurance into the 21st Century

 

About

How do you bring a radically new idea down to earth and make it real? How do you validate the market for a product that doesn’t even exist? And how do you do this with a view to getting a very specific kind of incubation and growth support, as well as capital, in a narrow, niche industry?

In this episode, insurance technology entrepreneur Soton Rosanwo talks about her incredibly thoughtful and systematic approach to getting, capturing and selecting ideas, how she balances head and heart in navigating her startup path, her step-by-step approach to validating her market with a small budget, getting the exact right accelerator for her niche startup, and much more.

Episode highlights

1. How to never lose a potential startup idea again
2. How to figure out if an idea is a good fit for you
3. How to evaluate the merits of an idea you like
4. How to zoom in on the vital few factors that will make or break your idea’s success
5. How to collect reliable data even a VC will accept, without breaking the bank
6. How to collect market data when you don’t have a research budget, even a small one
7. How to develop your idea systematically through stages so you don’t waste time or money
8. How to select the right accelerator for YOUR business
9. How to find, hire and compensate your earliest employees
10. The one warning sign to watch for when hiring new employees
11. How to find the right investors for your startup
12. How get better negotiating outcomes, even if you hate to negotiate
13. The one thing to never lose sight of during your entire entrepreneurial journey

Links & Resources

Centinel – the innovative insurance technology company that Soton has founded

AYTM – Ask Your Target Market – a market research firm

DScout – market research firm

Northwestern Mutual Black Founder Accelerator – a dedicated accelerator funded by Northwestern Mutual for Black Founders

Interview Transcript

Shubha Chakravarthy: Hello Soton, welcome to Invisible Ink!

Soton Rosanwo: Thank you so much for having me on today.

Shubha Chakravarthy: We’re excited to have you! Let’s jump right in.

When and how did you decide to become an entrepreneur? You have a pretty interesting journey.

Soton Rosanwo: Entrepreneurship has been on my mind since I was a kid. Back in high school and even in college, I would make and sell commissioned artwork and jewelry. While I was working my first job out of undergrad, I actually had this curated Excel file that detailed all those companies that I was going to start along with their product lines, their estimated revenue generating capacity, and how it was going to lead me to retire before the age of 50.

So, I said, “You know what? No more waiting. We have to strike out now. We have to try it now.”

That’s what I’m here to do and I’m excited to be able to learn to do that.

Shubha Chakravarthy: Just out of curiosity, was there a theme around all these ideas that you put in a spreadsheet? Were there things that kind of popped out and said, “That’s the screaming theme throughout?”

Soton Rosanwo: There were three kind of spheres. So, the ideas were very much around design. That was one channel and ultimately I would still like to do something around design.

The second sphere was around virtual assets. I was really into this in 2010, like the Bitcoin white paper had recently come out a few years before that and the first real world Bitcoin transaction had happened.

I was working at an ad agency with State Farm and my agency had a competition to dream up new business models for your clients. So, I was like — virtual asset insurance! Because at the time people were spending thousands of dollars on in-game assets in like World of Warcraft and then thousands of dollars to spend them, or even more to get them back if they lost them. I thought, “This is the future.”

Then the third channel was around social good. So to me, a question had always been, “How do we build self-sustaining engines of economic growth as opposed to charity. We can’t just rely on what can sometimes be like band-aid solutions. So, how do we create solutions that then create the solution and propagate the solution?

Those are the three things that I was focusing on back in 2020.

I was looking at three options and interestingly enough they aligned pretty well with those three themes. The reason why I chose Centinel was that I saw an upfront pressing need. But also my thinking was, “It’s a big idea, not necessarily a bootstrappable idea, but should it work I could provide a lot of value to people in the short term, in the near term”, and then it was also an idea that was big enough to then be able to fund going into some of the other two areas.

Shubha Chakravarthy: That’s a fantastic segue. You set me up for the next question.

Tell us all about Centinel. What does the company do and what’s your vision for the company?

Soton Rosanwo: Centinel provides claims-free coverage for hard to insure risks and we do that by taking what’s called a parametric approach.

Your standard insurer is very focused on the level of damage that their policy holders experience.

The policy holder experiences some damage and then they file a claim and the insurer figures out how much of that loss they’re going to cover. Centinel on the other hand, does not focus on the level of damage. Rather, we focus on the parameters that define whether or not the risk has occurred.

So let’s say you have a guy named Bob and he says, “I want coverage for my flight. I want a $500 payout if my flight is either canceled or three hours delayed.”

We say, “It’s okay, Bob, we got you. We are monitoring your flight details in real time, and should we see that your flight is either canceled or three hours delayed, we’re just going to automatically send that payment to you. No need to file a claim or anything like that.”

So, what Centinel does is that it takes the underlying principle in that example and applies it to hard-to-insure risks in four areas.

Those four areas are interrupted utilities — as in with power outages or power surges.

The second is around infectious diseases. For example, testing positive for COVID and being hospitalized.

The third area is around climate change risks like hurricanes, flooding and that sort of a thing.

Then the fourth area is around canceled events.

So once again, I know going into the pandemic, I had a number of friends and acquaintances who had to cancel their wedding plans and weren’t necessarily able to get reimbursement from some of the vendors that they worked with once cities and towns went into lockdown and all of that.

So each one of those four areas is massive. We don’t plan to try and tackle them all at once. Our initial use case is going to be around interrupted utilities. We plan to launch with coverage for power outages, power shortage, that sort of a thing and then from there, grow out able to provide coverage for the other risk areas.

Shubha Chakravarthy: Wow! That is pretty complex. I can maybe see some of these themes coming up from your earlier ideas, but where did this idea come from?

How did you put it all together into this cohesive and comprehensive concept that has become Centinel?

Soton Rosanwo: So my first brush with insurance was doing brand strategy work for State Farm and that’s where the whole virtual asset insurance idea or concept first kind popped into my head.

Then fast forward — post Booth and MBA, I went to Bain, where I did some work and diligence around digitalization and insurance. I was thinking of ways to bring a data driven digitalized approach to insurance.

So, I left Bain and went to Allstate where I managed product strategy and innovation.

One of the first things I noticed when I got to Allstate is that the common risks that we face that are the bread and butter of a typical P&C (property and casualty) insurer are actually becoming inherently less risky over time. So if you look at the balance sheet of a state farmer in Allstate, the cash cow is going to be auto insurance.

But I was thinking to myself, what happens when we reach full autonomy? If you have a self-driving car that you can’t take control over and it gets into an accident, are you liable? Or is the OEM manufacturer liable? And I think the answer is that the OEM manufacturer’s liable. Personal lines are going to become commercial lines.

I think we’re already seeing this with a significant amount of OEM auto manufacturers vertically integrating, up the chain into insurance as well.

On the other side of the equation, I noticed that many of the common risks that we face every day are incredibly difficult to cover using standard insurance.

So I thought to myself, given the proliferation of data and access to data as well as the advent of decentralized and distributed systems, why can’t we use or leverage that data to make these hard to ensure risks coverable?

So that’s what set me down the path to thinking about Centinel.

Shubha Chakravarthy: I’m thinking you have all these ideas. You mentioned having three finalists right before you picked Centinel.

Did you use some criteria? Did you score them? Was it just gut instinct? What was that process?

Soton Rosanwo: I think some element of it was was intuition. The next level was thinking through, “How quickly can I deliver the most amount of value so that I can unlock the ability to do other things that will then also provide value?”

I would also say thinking about in terms of value, “What is the mission that each one of these businesses would be trying to accomplish?”

My goal in Centinel’s driving mission is really around providing peace of mind when insurance just isn’t enough. So, the aim was to not necessarily replace insurance, but to complement it.

So we focus on those risks that insurers typically exclude from their coverage plans. We also try to alleviate the pain that insurance poses due to the claims process.

Think about everything that’s happened in the wake of Hurricane Ian. You have many people who went without power for days and likely will not be able to claim on the damages they suffered from that.

Moreover, not just policyholders, but carriers also are expressing a lot of dismay over whether they’re even going to be able to process the sheer volume of claims that have come through.

Even if a policy holder was to get their claim processed, they’ll face the prospect of really high deductibles and they’ll need to start repairs before they may even see a reimbursement.

With Centinel, on the other hand, those policy holders could get a check right away to start getting their lives back on track.

That’s the mission for Centinel and the way in which Centinel is going to deliver value, and that’s immediate, that is what hit and checked that box on why to prioritize this now as opposed to some of those other ideas that I had.

Shubha Chakravarthy: It sounds like you focused on value and you defined value through the lens of impacting the people that you eventually want to impact in a very visible, tangible, and immediate way.

Soton Rosanwo: Exactly.

Shubha Chakravarthy: So you have the idea, clearly it’s something you can’t start on the street corner and bootstrap your way into.

What happens next? How did you figure out how you’re going to take the next steps? How did create that roadmap?

Soton Rosanwo: I like to be as data-driven as possible. One of the first things I wanted to do is I felt I need to get the answer to two crucial questions:

One, “Does anybody actually want coverage for these hard to insure risks?”

And two, “Is it even economically viable?”

To get the answer to those two critical questions, I commissioned a study with 400 participants.

I was actually almost a little bit afraid to actually deploy the study. I was talking to my sister about it and she said, “Well, what are you waiting for?”

And I’m like, “Well, what if the data comes back and it says that people really need this and it’s positive?” and then she said, “Well, yes, then you do it.” Then I said, “Well, yeah, I have to do it.” So, I did, I got on my way.

I deployed the study and the results came back showing, on the demand side of the equation, three things.

One, people were concerned. Over 70% of US adults indicated that they didn’t have adequate coverage for the risk areas that Centinel was targeting.

It also showed that they want coverage. Over 70% said that they would be interested in purchasing coverage and they were also shared the levels of coverage that they would like according to the payout amount. So with that information, I was then able to start plugging in data on risk probabilities and saw that yes, there is an economically viable path forward for Centinel.

Shubha Chakravarthy: You said you deployed a survey. How did you find the 400 people? How did you make sure that they would be valid if you went to an investor? Because you were going to have to go to investors so that they would stand the test of scrutiny.

Then how did you design the questions so that you knew that they would be valid versus just you dreaming up some random questions?

Soton Rosanwo: I think for me, I think it was a blessing that I started off my career on the marketing side of things because it gave me a very consumer — human-centric perspective. I also think back to when I was an undergrad and I was thinking about what could be interesting to me.

I thought about consulting a little bit, but as I was going through the case studies, I realized that the marketing studies were the ones that I thought were the most interesting. So there’s that, little bit of a natural bent to focusing on the consumer.

Also, that experience within marketing helped me to understand what tools were out there that I could leverage. I knew that I needed to be scrappy and that I didn’t have the biggest budget, but I also knew that I needed to create a study that was going to be statistically significant and have a broad reach and try to eliminate any potential confounds in the data.

Fortunately, there was a tool called a AYTM or Ask Your Target Market, which is really great for quickly deploying studies where you’re able to choose a level that gets you to a statistically significant threshold, which is why I chose 400 participants, as well as giving you the ability to reach nationwide.

On the back end you can get all of this demographic data as well to see who was answering these questions, what industry were they in, where do they live, and all of that stuff. So, you can do a lot of further analysis on the back end as well. That’s why I decided to start there.

In terms of structuring the study, I wanted to make sure that I was not leading the witness.

So, you think of a funnel and I started from a place where the funnel was widest, allowing the consumer to first tell me what they think without me leading them with question.

My first question was free response and it said, “Tell me all of the risks that you face, that you don’t feel like you have adequate coverage for.” So when I got that information back, I was able to then start categorizing to see what themes emerged and see if there were themes outside of the five risk areas that I had identified.

I then asked a question saying, “Okay, here are five risk areas. Do you feel like you have adequate coverage for these five risks?”

From there, it became, “Do you wish to purchase coverage for these five areas?” and then, “If you were to purchase coverage on a scale of zero to $10,000 in increments, how much coverage would you want to receive?”

Shubha Chakravarthy: Did you talk to a marketing expert or someone to analytically vet the survey questions?

Soton Rosanwo: I didn’t necessarily feel like I needed to because I would’ve been the person that would’ve gotten called, having done brand strategy for not just State Farm but for Motorola as well and other clients and then also managing teams that would then have done this study also at Allstate and other places. I felt confident in my ability to create that study.

But if you don’t have that competence and if you don’t have that experience, I would say first, look at your network.

The last thing I would say is that many of these tools and resources have internalized consulting aspects to their business where you can talk with them to get assistance on developing or structuring a study.

Shubha Chakravarthy: To build on that, what kind of budget are we talking about if I wanted to go and do this AYTM, how much should I put aside? For the most bare bones, but valid.

Soton Rosanwo: I like to operate on a dime. So, for Ask Your Target Market, we’re looking at maybe $1,000 to $2,000 for the level of study that I did, which isn’t necessarily cheap, but it’s also way below the eye blistering level of costs for other studies that I’ve done in the past.

Another vendor who I’ve worked with before who I like would be Dscout. My study was more quantitatively driven, but for the more qualitative studies, I think Dscout is great, but they’re pricey. So, there you’re looking at tens of thousands of dollars.

There are other studies that I’ve done with different vendors as well, where you’re looking at $90,000, a hundred thousand, and that’s just really out of reach for a startup.

So, I think that for a very early stage startup, something like Ask Your Target Market is a really great place to start if you’re trying to actually get out there and get real live feedback from a broad range of consumers.

Shubha Chakravarthy: Are you aware of anything you would recommend, anything even cheaper than that? For those of us who are operating on even more shoestring budget?

Soton Rosanwo: I would say then you have to get down and dirty. There was a volunteer market study project that I did for a more decentralized DLT (distributed ledger technology) project.

They were trying to understand how to structure their marketing approach. So, I commissioned this study that was both qualitative and quantitative.

On the qualitative side, I just went out there and went on Twitter and just started looking for people. I went on focus groups and said, “Hey, this is who I am. This is the project that I am collaborating with. Do you have time to chat?”

So basically I did a lot of qualitative interviews that way, but I then used to understand the themes around which I should structure a more quantitative study.

So then once I had those themes, I built out a quantitative study and then you want to find out the places where the people whose feedback you need hang out. Then going to those different social media channels and then asking the moderators, “Hey, this is the research I’m trying to do. Would you be willing to allow me to share this with your audience?”

Then being able to get feedback that way. So through that route, I was actually able to get responses from 600 participants. So, that’s definitely a way to go.

I think the one thing to watch out with something like that is you have less ability to eliminate certain kinds of problems in the data because you may not get as broadly distributed of a sample as you may like and you’re not really going to have access to that demographic data on the back end for further analysis.

You can ask some of those questions within your study, but it just may not be as comprehensive in scope.

Shubha Chakravarthy: Not to mention the time, the opportunity cost of time it takes, right?

Soton Rosanwo: Oh yeah, there’s that too.

Shubha Chakravarthy: So were you working through all this or did you just fund it out of your savings?

Soton Rosanwo: For that volunteer project, yes. I was working through all of that and it was just kind of out of the goodness of my heart and because it’s interesting to me, a problem is interesting before you solve it, and I never met a problem that I didn’t like if it’s unanswered. So that was that for Centinel.

The first year or so was mostly primarily funded out of pocket with Centinel.

The first thing I focused on doing after leaving Allstate was file a provisional patent and then try to move forward, which has since been converted into a non-provisional patent.

So then I had to try and move forward with developing out a prototype as well as expanding the team to file for that provisional patent as well and to build up that POC. That was all beg, borrow and spend your own.

Not even borrow, just beg and spend your own money and so that’s that’s what I did.

Shubha Chakravarthy: When you say POC, you mean proof of concept, right?

Soton Rosanwo: Yes. Proof of concept, like a prototype.

Shubha Chakravarthy: Excellent. So what timeframe are we talking about? You get the idea, you decide on this and all of this. How long are we talking about for all this?

Soton Rosanwo: The idea for Centinel first popped into my head when I joined Allstate in 2018. The idea for Centinel first began to crystallize in my head in fall of 2019 – I call it my book of plot bunnies. Whenever I have these ideas of, “Oh, this could be an interesting route to providing value”, and then I just note it and then, move on.

It wasn’t until mid-2020 when we were all working from home thinking, “Is this what I want to be doing with the rest of my life?” that the idea around taking an approach for risk coverage resurfaced. That’s when I commissioned that study and had those results come back.

So when the results came back I said, “Okay, this is definitely something I think I need to do. It is not a bootstrap business. How am I going to do this?”

I started thinking about accelerator programs and then decided to leave Allstate in the fall of 2021 to focus on Centinel full time.

Then I said, “The first thing I’ve got to do is look for somebody with a strong background in data and then somebody who also has a strong background in engineering. Before I do that though let’s see if there are any IP here that’s protectable.”

So, I got in contact with a couple of lawyers and worked with them to file that provisional patent which I funded myself.

Then I went through an adventure trying to build out the team. People often tell you that the hardest challenge you’re going to face is an entrepreneur is finding the right people. That can’t be overstated. It is a fact.

So, I went through many twists and turns. I ultimately ended up working with a guy who was a former colleague and coworker at Allstate on the engineering side to build out that prototype and an advisor Generac CIO Tim Dixon, was super-instrumental in connecting me with the wonderful UX team at Invisia who really championed the vision of Centinel and helped to build out the initial design and that’s what got things going.

I would say, just to put a cap on that, the two key lessons that I learned along the way in that first year just trying to get things off the ground is that you cannot be too judicious when it comes to building out your team and to look for people who put the vision and the mission first.

If a prospective team member is most primarily concerned with how much equity they’re going to get and what’s their ownership stake rather than the product and the mission then it’s a massive red flag. The second thing I would say is to hire slowly and fire quickly

So I think those are some key learnings that I learned from that.

Shubha Chakravarthy: When you talk about the extent how you found this engineer, you found X, Y, Z advisors, but when you found these people with whom to work with on your team, what kind of arrangement did you enter into with them?

Soton Rosanwo: I would say that with this particular engineer we’d known each other for a number of years and his willingness to work on the project really came out of his knowing me and thinking of me as a friend and his thinking that the problem that we were trying to tackle was really interesting and wanting to explore that.

The interesting thing is, and this became like a theme, that I was the one who had to bring up compensation comp with him.

His response on that was “Hey, cool but really right now I’m more interested in helping you. For now, just donate to Ukraine on my behalf” That was one of his particular requests and I was like, “Cool! I’m doing that already. I can do more on that.”

But definitely being upfront with offering equity, compensation, and those sorts of things, and being willing to do that and see, what the person is looking to do.

With the data scientist who’s also joined the team since, it was shocking to me with her because all the majority of the experiences that I’ve had before were people who were like right off the bat, “Give me 50% of your company.”

And I was like, “I don’t know you. I’ve never worked with you. I don’t know anybody who has ever worked with you. I don’t know what kind of value you can bring and I don’t know what it’s worth and you want me to sign this over?”

So, this data scientist was an advisor or a mentor I met through the accelerator program that Centinel’s currently in and she said, “Hey, I want to follow up with you. I’m really passionate about what you’re doing. I love the vision. I want to join the team, I want to work on this.”

So we had this extensive conversation. I’m like, “Okay, cool. So what are you thinking about in terms of compensation?” She said, “No. I just want to show you what I can do first.” I was like, “That’s a first. Okay.”

For me, I guess it’s like once bitten, twice shy because with the first data scientist that I tried to bring on, he was on the project for almost about four months and I would say within that time period he showed me no work and all of our conversations revolved around the fact that he wanted 50% equity.

He vanished and ghosted, like at the last minute I was hoping to plant apply to a particular accelerator and he said that he was doing the data and even some of the early engineering to build up the prototype and just disappeared underneath my feet at the last minute. But fortunately I had not signed anything with him around “you’re going to get this equity or this ownership” or anything like that.

So I didn’t get myself into a bad situation that I could have. Many months later and a little bit wiser I did some more research around this and I think some things that an entrepreneur should think about when they’re building out their team is to lean into trial and probationary periods.

So that’s something that I’m making standard now for anybody who wants to join the team. And then don’t really discuss or promise any specific level of compensation, whether that’s equity or cash compensation until after that trial period because you’re really not going to know what to offer because you don’t know what value this person can bring.

That would be the second thing and then of course the standard, even with that, vesting schedules and cliffs, use them always is what I would say.

Shubha Chakravarthy: This is excellent advice and a great suggestion. So, for that trial or probationary period, how do you make sure that they’re not left hanging for having done the work?

Soton Rosanwo: Yes, exactly. So the interesting thing was that I loved the fact that this particular person was so passionate about the idea. I was deeply uncomfortable with the notion that to me, one of the worst case scenarios is where we get to the end of this probationary period and they’ve done some work that’s good but maybe something about the relationship isn’t the right fit and then they somehow leave empty-handed.

I’m just not comfortable with that. So, I talked to some different advisors about it. Some advisors were like, “They want to do it for free. What’s your problem with it?” But I was like, “No, I just don’t feel comfortable with that.”

One person said, “Well, if you want, you can make them an offer for a bonus payment at the end of the probationary career for having delivered the requested or defined task.” I did that.

So, in the agreement for the probationary period, I put that in there that it’s still a startup, so it’s not going to be some huge amount, but it was at least for a startup, a non-trivial amount, saying “Should you successfully meet the required or requested tasks during this probationary period, you’ll be eligible for a bonus of this amount.”

So, when I went back to the data scientist who joined the team on that she appreciated that. She still held to her idea that, “I’m here to show you what I can do.” But she also said, “But I do appreciate this gesture as well.”

It also helped me to feel more comfortable with the arrangement because like I said, I just don’t want anyone to feel as though they’re being exploited in any way or that they’re being taken advantage of in any way.

Shubha Chakravarthy: Fantastic. Thank you. So you mentioned data scientists and engineers. I know you’re in the insurance space, but it’s a very different take on insurance.

Having been in insurance, I know how it works and parametric insurance is different. How would you characterize the industry you’re playing in and what’s unique that matters to you as the startup founder about this industry?

Soton Rosanwo: When I talk to people who have some experience with insurance it is that they get caught up on the underwriting actuarial aspect of this and they’re like, “Well, like you want an actuary?” I’m like, “Yeah, actuary would be nice.”

But to a degree you could say the actuary’s role is like a type of data science. But we want to think more broadly than just an actuarial approach. A part of that is because with insurance and actuarial underwriting, you once again are very much focused on damage and loss history and records, with claim history and all that.

But because Centinel was taking this parametric approach we are focused more on the other side of the equation which is around the risk probabilities. “What is the likelihood of this risk occurring to this particular policyholder?”

So that’s one differentiator. I think another thing that definitely differentiates it is when we say, “What is the risk? What is the likelihood of the risk? What are all of the different sort of parameters that would inform that?”

And because of the risk types that we’re looking at we’re likely looking at much different data sets than what you would typically see at P&C (property and casualty).

Shubha Chakravarthy: I don’t know if this is right, my guess is those would be more publicly available as well than the typical proprietary loss data that you see, CLUE reports and things like that.

Soton Rosanwo: Some of it, yes. So, some of it is more publicly available. So, we recently closed the deal on getting semi-private data sets that will be helpful to us.

So some of that but some of the other information, for example, if we’re looking at weather-related risks then there’s going to be a lot more that’s publicly available.

So, the differential value that we’ll be providing is what, “How do we model that data? What insights do we derive from that data?”

Shubha Chakravarthy: Awesome. Going back to the next big piece, you’re not bootstrappable, you have to get funding. How did you approach the whole funding strategy approach? You mentioned accelerators. Walk us through the process of how you thought through that

Soton Rosanwo: As I mentioned, the first year of the business was almost entirely self-funded. As we all know, capital, especially early stage capital is really difficult to attain for people of color, especially POC female founders. As a backstop, we are often told to just do a friends and family round.

But for many of us, that’s just not a viable option as it was in my case. However, I knew that Centinel is not something that I could just bootstrap as a business idea. I knew I could probably get to the prototype myself, but anything beyond that was going to need formalized funding.

So, I was looking at trying to get into funded accelerator programs as a primary goal. Fortunately, Centinel applied to and was accepted into Northwestern Mutual’s Accelerator for Black Founders that’s powered by gener8tor. That was an amazing opportunity, not just because it came with a hundred thousand funding, but also because the accelerator focuses on FinTech, and data analytics. Plus it provides a wealth of networking and mentorship opportunities that we’ve really been able to lean into.

So, that was the approach. Going into that accelerator I had three goals for Centinel, one of which was to take the existing prototype that we had and expand that out into an MVP. We are well on our way to meeting that goal and we’ll aim to open up our first real round of fundraising early Q1-2023.

Shubha Chakravarthy: There are a lot of accelerators out there and lately I’ve been reading some research and hearing some thoughts expressed in terms of, “Not all accelerators are made equal.” So, clearly it sounds like you did your due diligence.

What did you learn about the whole accelerator space and what are some of the pointers you would offer to another founder who may be not as familiar as you are in picking the right accelerator and watching out for some of these signs?

Soton Rosanwo: I think like at least four things are coming to mind right now.

The first thing is, I just don’t believe in accelerators that are taking money. If they are asking you to pay to participate, pay to play, walk away because you are the product. You are the business model, right? They’re not actually, in my opinion, accelerating you then, they’re probably slowing you down because this is a startup. You don’t have the money to be spending on that. So I would walk away from that.

That’s different from a more incubatory style accelerator where they may not be funding you, but they’re not taking money from you. If it’s more like an incubatory accelerator where they’re not necessarily funding you, but they’re giving you access to other resources that’s okay. But in my opinion, if they’re asking you for money to participate, pay to play, I wouldn’t do it. So that’s number one.

The second would be around the financing, “Does the accelerator fund you?” Ideally the accelerator should fund you and there are sub bullet point here. “What are their terms?” So, I would say for an early stage startup if you’re going to take accelerator-based funding, it should come in a form of a note. Either a SAFE note or maybe a convertible note is what I would say. The second and third bullet points are very similar, which is, funding is great, but funding alone is not enough.

So, if you’re going to look at an accelerator program, you want to see what value do they provide to you above just the check. Are they providing you with networking opportunities and are they providing you with mentorship opportunities?

And then the last thing that I would mention is thinking through not just the additional type of value that they’re providing you with, but what are their areas of expertise? Is there some kind of key affinity or alignment between the industry or sphere-type of problem that you’re trying to solve? What is their own experience with other startups or with investors or key suppliers or partners within that ecosystem?

Shubha Chakravarthy: That’s a fantastic checklist, so thank you for that!

So, in your case, it feels fairly specific. It’s insurance so it’s pretty narrow, right? It’s FinTech, it’s insurance. There may be two or three types of accelerators which pop up as obvious suspects, but in something that’s more generic how do you go about doing this due diligence?

Where do you find the information that you just talked about? You talk to other founders who have been through that, “What are effective methods of doing that due diligence?”

Soton Rosanwo: I would say Google is your best friend and there are a lot of compiled lists of different accelerators.

Being a nerd, I had compiled a list of all the different accelerators that I had come across and I had my own evaluation framework for for them that very closely limited the criteria that I just said. I would rate them based on those things. I think I had them like divided into platinum level, gold level, silver level, bronze level.

So, that’s how I approached it versus just looking. Like I said, Google is your best friend. Lots of curated lists. Go through those curated lists and then use that as your launching point to start. So, the criteria that I share, that’s my criteria, but everybody’s coming from their own unique perspective or situation.

So, create your criteria. Know what’s important to you and then start going to the websites of these accelerators. Start looking at the startups that are within their portfolio.

Start trying, if you can talk to any entrepreneurs who may have applied to those programs been interviewed by those programs, got in or were rejected to those programs, to just get a sense of what the experience was like and use that to formulate and formalize your perspective on who would you actually want to work with.

Who do you think is worth applying to?

Shubha Chakravarthy: Fantastic. And one last question on accelerators, and then we’ll move on to the other fun process questions here.

So there’s, especially after COVID, earlier we used to have Y Combinator where you actually had to give up everything, go stay there for whatever number of months. Now there’s a proliferation of virtual accelerators. Do you have a point of view in terms of, is one better than the other or anything in terms of those?

Soton Rosanwo: So, the accelerator that I’m in right now is hybrid. So, there are few things where we have to be present on site in Milwaukee.

But the majority of it we do remotely and I think it works perfectly. For me, I don’t feel as though I’m missing out on any kind of experience. We kicked it off with an in-person kickoff where I had the opportunity to meet the founders from the other four startups that were in my cohort.

We were able to share experiences, develop community, develop that rapport, which was great. We were together for a few days and I felt like that was enough to get things going. So. we do have at least twice a week a meeting where the whole cohort gets together either in AMAs or lunch and learn sessions or working sessions and I feel like that’s the right level.

Then the rest of the time there’s some one on one stuff that each startup does with the accelerator program staff themselves or individual mentors. One thing that I’ve heard oftentimes from people who participate in the accelerators that are always on site, is they felt as though they didn’t have time to actually work on the business, which sounds counterintuitive.

But they were so fully scheduled all the time that they may have less bandwidth to apply towards marching towards their goals. I don’t get that sense. So to me, I think hybrid has been a really good experience.

Shubha Chakravarthy: So, moving on to fundraising? I know your being in the accelerator is going to help a lot with that. Can you talk about how you’re thinking about fundraising, how being in an accelerator impacts that and what your strategies are just in general?

Soton Rosanwo: I knew that that while self-funding might be enough and it was enough to get to a POC, to a prototype, that it wasn’t going to be enough to get to MVP(minimum viable product) and beyond.

To get to that MVP and beyond, that’s why I was really considering financing for funded accelerator programs. I also thought about Angels and VCs, but really the lead focus was around accelerator programs.

The reason why my primary target was funded accelerator programs was because I knew that Centinel would need more than just dollars. It was also really going to need that networking and mentorship.

That’s really one of the things or two of the things that you should be getting from an accelerator program. Beyond that, my hypothesis was that I would have a better time, a more profitable time, I guess you could say, in trying to find an accelerator program that would be more open minded around diverse founders.

That has been my experience and it has led to Centinel partnering with Northwestern Mutual and gener8tor and their accelerator program.

Then as I mentioned a little bit earlier, Centinel has three defined goals for our time in this accelerator program with one of them being taking that existing prototype and expanding it out into the MVP.

We’re marching towards that with the data scientist who’s just joined and as we bring on engineers as well. Our goal is to then open up our first official round of funding from angels and VCs, most likely angels in early Q1 23.

To do that we’re in the process of shortlisting who do we think would be a good fit for investing in Centinel to assess it. You really want to look at the firm’s portfolio. So, are they investing in startups within your industry? You also want to look at the stage and one of the things that I found is that investors all define, or many of them define early stage differently.

So you want to understand what stage do they say they focus on and what is their definition for that stage?

Because seed to some is one thing. Pre-Seed to some others is another thing. So, you just want to know and then you want to know things like, “What is their average deal? For a startup like yours what are their terms typically?”

As well as, “Do they lead rounds or do they prefer to co-invest? And if they co-invest, typically who do they typically like to co-invest with?” Those sorts of things.

Shubha Chakravarthy: Excellent. That’s a fantastic checklist. So, it sounds like you’re well on your way to getting funding.

Changing gears against slightly, I want to move more to the personal side of you. In terms of your fitness and how you felt about the whole process, what were the skills that you needed? What were the ones you felt you had and what were the biggest ones that you felt you had to pick up on this journey?

Soton Rosanwo: I would say that I think that as an entrepreneur you have to be scrappy and I think that just given my background scrappiness is something that I felt like I do well.

So, I was born in the UK. I lived in Nigeria for a year, which I don’t remember, but then I went back to the UK. I moved all around the US. I lived in Japan for a little bit too. So, I definitely say I bring something that I would call, or has been described to me as “immigrant mentality”, by which I mean that you ask for little and you try to be as scrappy as possible.

One of the things that I’ve had to learn though is that sometimes not asking for enough or trying to do too much with too little is a recipe for disaster. I’m trying to get more comfortable with being more forthcoming around asking for resources, whether that’s advice, funding or introductions.

Somewhat related to that is the topic of negotiations. So, I think that while thinking back to when I was at Booth for the MBA, I took a negotiations class and I was convinced that I wasn’t going to do well in it. I thought it was going to be terrible, but that ended up being absolutely not the case. I ended up performing the best in the class.

What I realized is that the moment I see myself as negotiating on behalf of someone else other than myself, I become an entirely different human being. So, walking out of that class, and it’s been like almost a decade since I’ve been trying to reinforce the fact that I shouldn’t by default diminish the value of my own personal objectives because I’ve had to do some soul searching. Like why is it that if you feel like you have to advocate for someone else, you can become like a lion. But when it’s advocating for yourself, you’re like a sheep?

We could talk at length about all of that, especially as a POC female and what feeds into that. I thought to myself, number one, your aims and objectives matter too. Don’t back down by default.

Then two, more specific to Centinel, I remind myself that when I go to the negotiating table, I’m negotiating on behalf of all of Centinel stakeholders, whether that’s policyholders to employees and beyond.

So, I think having that, wearing that hat and having that perspective helps. An important thing is learning to ask for resources and the second is being comfortable leaning into the negotiating experience.

Shubha Chakravarthy: Is there any handy tip in terms of learning to ask for resources that maybe we can take?

Soton Rosanwo: I would say once again, I’m a total nerd. I’m the kind of person who would create a decision tree to decide if they want strawberry or caramel ice cream. The reason why I say that is that sometimes you just have to spell it out to yourself very concretely on paper. What exactly is necessary to get to your goal?

First of all, what is your goal? What are the steps to get there? What do you need to get to those steps? What happens if you don’t get those resources?

Be painfully honest with yourself about it. Then you can remove that gray mist where you can trick yourself into thinking that you might be able to bend over all the way backwards until you’re flat or you’re back to do it.

So once you remove that mirage and you force yourself to face the truth squarely, you will almost have no choice. The only rational choice now is to move forward. That being said, you then have to cross this next bridge, which is around, “Alright, so I know what my objective is, I know what it’s going to take to get there. But how do I access those resources?”

That’s a massive challenge, especially for POC female founders. To do that, do your best to lean into the network that you have. Go to places where people buying look like you, who have done similar things and I say similar things because for example, this accelerator program asked me what kind of mentorship would I be looking for and I was trying to find. Well, I thought, “It’ll be really great to find another black female who started at FinTech or insur-tech.” But if I’m waiting for that as a mentor, I’m going to be waiting a good long time, right?

So don’t necessarily look for somebody who looks exactly like you, who’s trying to do exactly the same thing, because you probably won’t find it. But try and look for somebody who has done something similar enough and can bring perspective to your experience.

That’s one side of it.

Then the other side of it, and this is one of the issues with like affinity programs that you often see in the corporate environment is that you can’t make your only focus and strategy finding people who are like you but you want to crack into other networks. So, go out of your way to try and make connections with people who don’t look like you and and try and leverage that as well.

Shubha Chakravarthy: So this sounds like a pretty challenging, meaty journey. Have there been internal challenges where you’ve doubted yourself or have been some of those in how did you get into those?

Soton Rosanwo: For sure. When I left Allstate, I said to myself at the time that “We’re going to do this, we’re going to do it for a year and see where it goes and, if it doesn’t work out, you could always go back to the corporate world.”

So, then fast forward, like maybe six, seven months into it, I’m like, “Wow, okay. We’re, getting closer to that year mark and we still haven’t gotten any funding to the level that we would need to get to an MVP. What are we going to do?”

And and I was just trying to run through like my options and then it hit me.

I was like, “If Centinel doesn’t work, the answer isn’t that you go back to the corporate world. We can’t do that. If Centinel doesn’t work then the answer is that we find another way to deliver value as an entrepreneur because the reasons why you left the corporate sphere have not changed and your fundamental belief about entrepreneurship as a vehicle to deliver value also hasn’t changed. If Centinel isn’t working, it means that there’s a misunderstanding on your part, either on the problem or the solution. So we pivot, right?”

Shubha Chakravarthy: So, I have a few other questions in terms of just that some of the tactics. One thing which I had meant to bring up earlier was that there is a lot of stuff here.

We talked about valuation, about compensation, all of which come back to this question of financial understanding, the financial chassis of the business so to speak, and projections and the business unit economics. How comfortable did you feel tackling that and what worked for you to master those and enough to be able to run your business successfully?

Soton Rosanwo: I would say for that, between things that I would highlight would be my experience working as a management strategy consultant at Bain as well as the MBA from Booth. So as a management strategy consultant, you have to learn how to be a jack of all trades really quickly, especially working at a firm like Bain where they have a generalist model.

So it’s kind of like you don’t go in with a “This is my specialty”, mentality. It’s whatever the challenge is. Whatever the case demands, whatever the client’s needs are, you’re going to figure that out. And when I was at Bain in particular and why I chose it was for that generalist experience and I got it.

So, I had the opportunity to do lots of financial model development and all of that. I knew enough to be dangerous and not just to be dangerous, but also enough to know when and where to bring in specialized counsel should I need it. So between those things I think that’s how I’ve been able to navigate those areas.

Shubha Chakravarthy: And for those who may not have had that exposure or experience, what would you suggest as a good alternative?

Soton Rosanwo: I think the first answer in my opinion isn’t to immediately spring to raising your hand for help. I think that it’s important to be informed because otherwise people could tell you anything, right?

So, I would say number one is getting information, whether it’s like getting some books or going through your network to find people who work in those areas. Get informed.

That being said, don’t be doing something that you shouldn’t be doing, but you don’t have the skill set to do. So, once you’re informed, once you’ve tapped your network to find counsel to actually help you build out those things that you need to build out and to do that once again, that’s leveraging your network, whether that’s through where you’ve worked before or through school friends sort of a thing – LinkedIn, just doing a shout out saying, “I need to understand how to do this” is great.

Shubha Chakravarthy: We’ve covered a lot of ground. I know we’re also probably out of time to conclude but maybe I’ll ask you two questions. One is, what do you now know that you wish you knew at the start of this journey? And then secondly, what advice would you give to others who may be earlier on the path than you are today?

Soton Rosanwo: The first part is like, what’s one thing that I wish I’d known?

Shubha Chakravarthy: Yeah, but you now know.

Soton Rosanwo: I think one thing that I’d wished I’d known that I now know is that a lot of the struggles that I went through, it wasn’t just me. One of the meaningful parts of the experience that I’ve had in this accelerator program is just being able to hear the stories from other founders. And it’s “Wait, I’m not the only one?”

So, don’t despair. If you feel like you’re trying to figure something out or something just isn’t clicking, just isn’t working. The problem is probably not really necessarily you, it just might be an aspect of the experience and I think that’s really why it’s important for an entrepreneur to embed themselves in entrepreneurial community.

People often say that entrepreneurship can be a very lonely road. That’s true, but it doesn’t have to be. So, by embedding yourself in community you can you can definitely learn from the experiences of others and realize that oftentimes it’s not just you.

So, one piece of advice that I would share, is to know your passion.

To me, entrepreneurship isn’t so much about the business idea itself as it is about a way of working. If you know that you are passionate about working in the entrepreneurial way then you’re going to face challenges no matter what your business idea is.

Focus not so much on the type of value you want to deliver though that itself is important but how you want to deliver the value too. I think that in those moments that are dark, because there will be dark moments, it can be a shining, guiding light to keep you going and leading you forward.

Shubha Chakravarthy: Fantastic. Thank you Soton. This has been an amazing conversation. I really appreciate the time.

Soton Rosanwo: I’m glad. Thank you so much for chatting with me. I’ve really enjoyed it as well!