Due Diligence For

CROWDFUNDING

Company Overview –

GApro instantly and securely shares insurance information anytime, anywhere, to anyone who needs it through easy to use self-service access.
*Souce: Netcapital

Company Investment
Name: GAPro Minimum Raise: $20K
CEO: Herbert (Herb) Gibosn, Jr. Maximum Raise: $100K
Company Founded: 2012 Structure of Raise: Common Stock
Location: Detroit, MI Valuation: $4.845M pre-money valuation
Crowdfunding Portal: Netcapital Minimum Investment: $100
Crowdfunding Link: https://netcapital.com/companies/gapro  
Website: http://gaprosystem.com/  

Review Overview

Positives Risks and Reservations
Team is highly experienced in the industry as well as in their respective roles. Company is very early stage – pre-revenue. There is little ability to evaluate traction, pricing and the market’s acceptance at this early stage.
They have signed their first customer to a pilot project with 17,000 policies. This effort should provide additional useful information. Company will likely require additional rounds of funding and the investor will face dilution.
If there is product/market fit, then growing through additional strategic partnerships may allow the company to scale quickly.
The recurring revenue model is great for revenue continuity and maximizing corporate value.

Problem

Every time a policy or business relationship changes, evidence of insurance and compliance verification is required. Today’s expensive certificate of insurance is a vortex of agent/broker manual effort, paper, email, faxes and procedures where data is both late and locked in certificate forms.

Solution

Current:
GAPro delivers data-driven Verification-as-a-Service, significantly reducing both costs and errors associated with legacy certificate form-based approaches. GAPro provides all insurance stakeholders with secure self-service access to their insurance information, providing real-time and ongoing insurance confirmation and compliance verification globally. Additionally, GAPro can provide new customers and sources of revenue for carriers and agent/brokers

Business Model

User payment for access to the software will be through a combination of usage fees based upon subscriptions and on a per transaction basis. Carrier subscriptions average $5K per year. Agency revenue is usage-based leading to subscriptions and averages $180 per year.

Traction

  • In partnership with Mercato Solutions
  • NAPA/Gallagher, 4th largest broker globally
  • 17,000 pilot agents
  • 100,000+ potential agents
  • Recognized as one of the top InsurTech companies to watch in 2017
  • Partnered with Insurance Thought Leadership
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Herbert Gibson, Jr. Chester Gladkowski Naga Gautham Peddibhotla
Position: CEO & Founder Co-Founder, CMO, CIO CoFounder, CSO, CDO
Ownership Percent: 61.2% N/A N/A
Linkedin: https://www.linkedin.com/in/herbgibson/ https://www.linkedin.com/in/chetgladkowski/ https://www.linkedin.com/in/gauthamrao/

Advisors:

Insurance Company Operations:

  • Stew Nelson, Senior Risk Advisor – Kapnick Insurance
  • Bob Dowdell, Former Chairman and Chief Executive Officer of Marshall & Swift / Boeckh and advisor to Genstar Capital in the area of financial and business services.

Technology & Application Security:

  • John Wurler, President – One Beacon Technology Insurance Company
  • James McGovern, Chief Architect – Hewlett-Packard

Industry Research:

  • Art Judson, VP/Program Manager – Goss, LLC

Fraud Deterrence

  • Barry Zalma – Zalma Insurance Consultants, World Risk and Insurance News

Standardization Strategies

  • Jack Gibson, President & CEO – International Risk Management Institutes, IRMI

Insurance Agencies

  • Bill Wilson, SVP – Independent Insurance Agents/Brokers Association (IIABA)
  • David Walker, Board of President, 2013-2014, IIABA; President – Hartland Insurance
  • Tim Dodge, Director of Research – IIABNY

Insurance Carriers

  • David Wroe, – Former Senior Vice President and Chief Technology Officer of Chicagobased CNA and Chairman and CEO of Agency Management Systems, Inc. Currently Director of Insurity, Inc. and advisor to Genstar Capital in the areas of financial services and software.

Summary:
Team has significant experience and depth. I would expect that they also have extensive relationships with potential strategic partners,  as well as potential acquirers. The team does not appear to have experience in a software startup and that could present some unique challenges for them. However, they have completed their MVP and now the major issue is to begin getting traction with clientele – and I would expect that if they have product/market fit, that they will be successful in business development.

Market Analysis

Industry: Insurance Industry

TAM (Total Addressable Market): $29.3B
*Souce: Business Plan

Industry Opinion:
This solution is the first verification-as-a-service offering. While this can allow for quick growth and market share accumulation it also comes with the challenges of educating the market, which can be expensive and time-consuming.  Early first mover advantage may benefit the company significantly through network effects and thereby becoming the standard.

Competition

Differentiator:
The only competition is the handling of paper files which can be relatively expensive and time-consuming. This solution is the first to market.

Main Competitors

  EBIX Data Trac Certrax
Funds Raised $25M N/A N/A
Website http://www.ebix.com/ http://www.datatrac.com/ https://certrax.com/

Company Financials

Revenue to date: $0

Revenue Last Fiscal Year: $0

Previous Funds Raised:

  • $125,000 seed funding from Start Garden
  • $50,000 seed funding from Invest Detroit
  • $40,000 from PowerMoves
  • $35,000 Owners Cap

Use of Funds

  • Add capabilities and extend existing Pilot from 17,000 to 120,000 policyholders
  • License and deploy GAPro in the Asian insurance marketplace

Exit Opportunities

The company would likely become an attractive acquisition target by a variety of both strategic and financial buyers.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Nov. 28, 2016 MarketStance Verisk Analytics Unknown
Nov. 26, 2013 Applied Systems Hellman & Friedman $1.8B
March 23, 2012 MediConnect Global Verisk Analytics $348.6M

Expert Opinion Summary

The most impressing aspect of the venture is the quality of the team and their advisors. This is a very early stage company that is pre-revenue.  It’s so early that it is not yet clear if there is product/market fit.  As soon as they demonstrate that there is product/market fit and begin showing traction, this venture could grow in value very quickly.

AngelList: https://angel.co/gapro-system-1
Crunchbase: N/A

Disclaimer

Crowdfund Research is a publisher and does not offer investment advice to any specific individual.  Crowdfund Research and its authors do not receive any compensation for the due diligence reports. 
 Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment.  

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Todd Mortenson

Todd Mortenson

Co-founder at Crowdfund Research
Todd is an accomplished executive with experience leading high growth ventures in addition to serving as a board director. Mr. Mortenson has played a leading role in the launching ventures across multiple industries from Real Estate to Hospitality to Manufacturing to Oil & Gas to Industrial Equipment to High Tech. Todd received his MBA with a concentration in Venture Management from the University of Saint Thomas and his Certificate of Director Professionalism from the National Association of Corporate Directors.
Todd Mortenson

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