Inside MassMutual Ventures' new fund

MassMutual Ventures’ announcement on April 27 of a new $300 million fund targeting start-ups in digital health, cybersecurity, enterprise SaaS and financial technology looks to be a force for innovation in insurtech. 

Doug Russell, managing director and head of MassMutual Ventures, gives examples of types of insurtech technologies and some specific companies and products that the fund looks for or has already invested in.

“For cybersecurity, we look for a piece of technology that a cybersecurity company has developed that is gaining traction with existing insurance and financial services firms,” he says. “When evaluating companies, we spend a lot of time talking to insurance companies’ CISOs,  financial services companies’ CISOs and our broad network to understand the degree to which those companies are likely to adopt that technology.”

Within its sector choices of healthcare and financial technology, the venture capital firm is particularly interested in decentralized finance and AI/ML applications.

MassMutual Ventures’ new fund brings its total investment in technology startups to $750 million, spread among several regional portfolios in the US and Asia-Pacific. Two-thirds of that total has already been committed to companies. The new fund marks MassMutual Ventures’ first entry into Europe. Overall, MassMutual Ventures has about $300 million in US funds, with about $100 million in each of three funds. The firm’s Asia-Pacific arm has three funds, the first started with $50 million and the second with $100 million, plus the new $300 million fund. The firm sources all of its capital from its parent MassMutual’s general investment accounts.

In the US, MassMutual has backed insurtechs including Policygenius, Insurify and GradientAI, according to Russell. “Thematically, it is businesses that are developing products and solutions that insurance companies are purchasing, that have to do with securities, data, the use of data, the way you use data to make decisions – or helping with operational efficiency or effectiveness in some manner,” he says.

To choose where to invest, MassMutual Ventures looks for insurtech start-ups working on new technology models that can replace legacy technologies, adds Russell. “This is not to take anything away from legacy businesses, it’s just that maybe at times they don’t move as quickly or put in place the capabilities that a startup can,” he says. “It would be a business that's looking to some extent to dislocate or dislodge a legacy company. Others are technologies and capabilities that are actually enhancing or improving the way in which what we call legacy business operates. That’s anything in the enterprise software space.”

To evaluate the start-ups that the firm considers for backing, MassMutual Ventures evaluates the start-ups’ management teams, the market for their product and the quality of the product, according to Russell. “It’s in our assessment or judgment whether the management team has the ability to execute on the plans and strategy they put forth,” he says. “We look at the market. We look at the team. Then we evaluate the product itself or determine whether the product will actually perform in the way the management team is representing it.”

MassMutual launched Ventures in 2014 and has backed 60 start-ups since its inception worldwide in countries including the US, Canada, Germany, Israel, India, Singapore, Indonesia, Hong Kong and Australia. The firm has also backed insurtechs Embroker and Pendella Technologies.