Spike Lipkin, co-founder and CEO of startup brokerage Newfront Insurance, speaks with Acuris Capital Intelligence about the company’s growth plans and why he thinks the organic route fueled by its proprietary technology is better for the company than growing through M&A.

Interview by Calvin Trice

Q. What sets Newfront apart in the relatively crowded insurance brokerage space?

When we started the business, the first thing we did was start building more intuitive software. When you think about the evolution of American businesses, a huge amount of the back office has moved online—payroll systems, accounting systems, taxes. We realized this was going to change the way the insurance brokerage space operated, so we've been building a modern system. It makes it much easier for clients to interact with us and makes it much easier for insurance professionals to interact with us. Frankly, that makes it easier and more productive for our carrier partners as well.

Q. What problems does your technology address in underwriting and handling claims?

It all flows from having structured client data, structured exposure data, and then structured data from the carrier's unstructured claims. Once you have all that data in a structured format, it's like turning on the lights. The client has transparency into their insurance program, carriers have an easier time underwriting the insurance and colleagues who work on these clients can be much more strategic and not have to do data entry.

Q. Newfront has raised more than US$300 million in capital since it started. Why is making acquisitions not core to your growth strategy?

We're very focused on organic growth, meaning clients and, frankly, being a talent destination for the best in our industry. The reasons why we're focused on that, in addition to the economics, is building a culture. So much of building a high-performing business is having a high-performing culture and it would be very difficult to control and build a culture through an inorganic growth strategy.

Q. How do you plan on using your capital to grow?

It's a couple of areas. One, it's going deep within various verticals. We have deep expertise in a lot of different industries—tech, life sciences, construction, agriculture and real estate, just to name a few.

We also just recently made a large bet on private equity. We’re building a specialized private equity team to handle the transactional needs of private equity firms. We found we can best serve clients by going deeply into verticals and building expertise.

So [the first part] is industry expansion—across a wider set of industries and further investing in specialized resources. The other is geographic expansion. We have plans to expand throughout the East Coast and Midwest, and we see big opportunities.

A bit of background: Based in San Francisco, Newfront is an insurance brokerage that leverages technology to simplify the buying process for clients and the selling process for brokers. It was founded by Lipkin and Gordon Wintrob, now the company’s chief technology officer. In July 2021, the company merged with ABD Insurance, whose co-founders, Kurt De Grosz and Brian Hetherington, are now executive chairman and president of Newfront, respectively. The company’s US$200 million funding round, announced April 12, 2022, valued the company at US$2.2 billion.

This interview has been edited for length and clarity.