Understanding the rollercoaster ride
Insurtech startup co-founder Shaun Quincey and GD1 co-managing partner John Kells discuss finding capital, doing due diligence, aligning values and collaboration.
Shaun Quincey says startup life as a second-time founder is still like a rollercoaster ride, with a lot of ups and downs.
He and co-founder Damon O’Neill founded insurtech Simfuni in August 2022 to help insurance sellers streamline how they process payments and back-office receivables. The most common interaction between either businesses and individual consumers and their insurance providers is paying insurance premiums, however the core platforms, systems and processes used to support that function are often outdated.
The pair also co-founded buy-now, pay-later startup GenoaPay, which they sold to Latitude Financial Services in 2018, although it was closed in 2022 ahead of new regulations for that industry.
Quincey is well-known as an author and celebrity speaker after becoming in 2010 the first man to row solo from the east coast of Australia to the west coast of New Zealand, which he did in just 54 days. His father, Colin, is the only other person to have rowed the Tasman solo; he did it in the other direction in 1977.
So he knows a bit about perseverance and grit, and that the boat sometimes heads backwards.
As a second-time founder, Quincey says he and O’Neill trust the process more this time, and are bouncing back quicker when hiccups occur.
“We just know that it’s a rollercoaster and we know not to be worried about informing our partners about that rollercoaster. We know to not panic when things do go a little pear-shaped and also to make sure we celebrate and tell all our investors when things are going great,” says Quincey.
Doing DD
Simfuni closed a $2.8 million seed round in May 2023, ahead of expanding into the Australian market where it has pilots underway and is hopeful of landing two large enterprise customers this year.
The biggest shareholder in the round was Icehouse Ventures (including investment from its limited partners), but the price-setter was VC firm GD1, which helped set the deal’s core terms.
Quincey and O’Neill hold just under 30 percent of the company each, while Icehouse Ventures holds 15.55 percent and GD1 has a 12.2 percent stake.
When raising the seed round, Quincey approached GD1, partly because it was a New Zealand-based VC and the co-founders wanted to keep some ownership here.
He’d also done due diligence on the firm’s credentials and questioned other startup founders in its portfolio on how it behaved when things were going well and when their backs were against the wall.
“You have got to be careful across New Zealand as sometimes there are a number of different people you can partner with where the domain expertise might not be quite there and the understanding and comprehension of the journey you’ve got to go on might not be quite there,” says Quincey.
The feedback he got from other founders was GD1 would help “buckle them in” for the rollercoaster ride.
“It doesn’t matter if it’s your first, second or third startup, it’s always hard, there are always unforeseen challenges. The first year is always rock’n'roll and at the core of it you need to be able to trust the person. It’s a marriage you’re getting into.”
GD1 co-managing partner John Kells says although the firm gets approached by a lot of founders, he was curious to meet Quincey because of his background and the co-founders’ previous startup experience.
Initial impressions last, he says, and when he first met Quincy and O’Neill he thought they were smart and driven. “If you’re not investing in the right people and you’re not going to have a strong, long-lasting relationship, then it’s going to be really difficult.”
They knew a lot of people in common, and Kells did his own DD to get a sense of who they were as people, how they treated others, and to verify what they had said.
He also wanted to assess whether he could sit down and have difficult conversations with them if needed, and be able to work things out together.
“Shaun is really open to new ideas. Obviously, it’s his company and he can do what he wants, but it’s a really good relationship.”
The co-founders were also very open to the investors meeting the rest of the team – another important element when backing a startup, says Kells.
“Founders who can speak very eloquently about their business and about the opportunity but you don’t get an opportunity to meet the people under them who may have different perspectives, then I find that’s a bit of a red flag.”
Values alignment
While the priority of any startup founder is getting the company funded, Quincey says it’s vital to have a team of investors with aligned values.
GenoaPay’s backers in its early rounds were mainly angel investors who took a lot of managing. “I learned a lot through that process of the value of good investors and bad investors and expectations across investors as well. Ultimately that was a great outcome for our backers, but having gone through that particular journey helped the framework for making decisions on why to go with GD1,” he says.
In Simfuni’s case, it was fortunate all the VCs involved focused on the company's needs and how the terms would work towards the best outcome for it and future rounds, he says,
“If a VC is making a point that they will only invest if they lead, [that] can be a red flag in my view as it signals very quickly that it’s more about them rather than setting the organisation up for success. New Zealand is a small ecosystem and constructive collaboration between investors helps NZ Inc build more companies faster and lifts the tide for all involved.”
Having a wide investor base and landing multiple investors with the ability to continue to support the startup long-term also improves the likelihood of its success, he says.
Kells says it doesn’t really matter to GD1 if it leads a deal or not, but given the firm only has $150 million in its generalist B2B Fund 3 to invest in 20 to 22 companies, it has to be selective.
“Whether we’re the lead investor or not we want to ensure we are putting as much operational value-add into our companies as possible. We’re not investing in too many companies where we’re overwhelmed; we’re just selecting the best and that’s the most important thing for us – building a strong shareholding and an alignment with the founders.”
Kells is an observer on the Simfuni board, and on average has weekly contact with the co-founders to discuss strategy, potential customer introductions and the founders’ mental wellbeing.
But GD1 also has a number of operating partners who have come out of the likes of Silicon Valley and New York with specific functional expertise, go-to-market strategies and international connections. They work as fractional executives for startups within the portfolio to help stretch their cash balances as far as possible before another raise is required.
Quincey says that ongoing support adds a lot of value beyond just getting cash from a VC who then walks away leaving the founders to sink or swim.
“You need the help, you need the pressure, you need that coaching and accountability and that’s like an Olympic athlete – no-one really gets there without a support network. Your VC partner is that coach that gives that injection of confidence and enthusiasm when you’re sitting at home going ‘jeepers, I’m getting paid hardly anything and when is this journey going to end?’”
Quincey says even second-time founders can’t be 100 percent certain where the cards will fall.
“You’ve got to be open to coaching and insights the whole time and I think that’s one of our strengths. We’re constantly getting things wrong but we have an ability to fix them and get back on track.”
What are the three key things you look for in an investor/founder relationship?
Shaun Quincey
- Trust
- Communication
- Confidence
John Kells
- Behaviour and integrity – it takes a long time to build a reputation and it can take just a moment to destroy it.
- EQ and IQ – founders always need to be selling to customers, service providers and when hiring team members.
- Communication – having the resilience to communicate all the good stuff and the bad stuff and to work through the challenges, because being a founder is a pretty tough gig.
