Per Aspera Ad Astra - First few month`s of Founder’s experience

Mihkel Mandre Founder & CEO at Lyfery.

Very often we hear stories from start-up Founders looking back at their journey after they have received significant investments in another funding round or been successful with their business model during their later phases. This time, I`d like to share my experiences while being in the midst of the “bumpiness”,?going through our status and lessons learned across major building blocks that?are necessary to bring Lyfery – New Generation of Life Insurance business model and product to the market.?

Introduction.?Lyfery addresses business areas, which are complex and with high barriers of entry – life insurance, health & wellbeing.?We knew from the very beginning that we are taking an appealing, but also a very difficult path. During my Lyfery building journey I have talked with close to 200 people including potential customers, partners, investors, advisors, employees, and various organisations and networks across?different industries. It is an enriching experience to see how each conversation has its own way helped us add a missing puzzle piece to our vision.

Majority of these 200 people have been fully new contacts, who have generously provided constructive criticism and advice. It`s comforting?to know that there are many people out there who are ready to support you during your most difficult times without an expensive advisory hourly rate. I suppose, if I were?an extrovert, that list would be twice as long, but as an introvert I am very glad about the network I have been able to build and expand.

Based on the conversations I’ve had, it is clear?that there is a major future business opportunity behind the Lyfery business model and the strategic-conceptual idea?(strategic level). That being said, this does not release us from various challenges, even some drawbacks from executing on different building blocks (on a tactical execution level). We don`t always control these important factors. Establishing a fully new business is always a complicated process where odds and statistical probabilities are against you. We need to navigate constantly. Current macro- and geopolitical environment makes it even more difficult.?So how can we and how can any start-up can handle and navigate these complexities? Let me dig deeper.

Vision & business model.?Lyfery is developing a unique life insurance offering, which will help increase the number of healthily lived years together with financial protection, thereby helping?reverse health care systems from cure to prevention. Along with that we want to build new tools, services, and channels, and provide?new data insights to our customers showing how their lifestyle influences their quality of life and lifespan. We aim to equip people with actionable information and personalised tools and?services?so they can make their own best decisions on how to protect and improve their lives. This creates a differentiated offering in the market, enabling us to move life insurance from a “push” product slightly towards a “pull” product (see more under distribution strategy below).

This, in turn, will open up new distribution channels. We want to create a business that is impactful and with high ethical standards creating value not only to our direct stakeholders, but to larger communities and societies where we live today and in the future. It’s a bold and large vision and has a potential to grow towards an even larger “wellness ecosystem”, towards “longevity business” or even towards “immortality as a service.” While we dream big, we understand the importance of staying present and understanding what needs to and can be done here today.

Team.?Working within a traditional company you usually have structures, responsibility areas, job profiles, budgets, workplaces, salary frames etc., that can guide you and support you if you look for new skill sets, more bandwidth or expanded resources. It’s a very different environment when you start from scratch with a start-up. All you have is your initial vision, pre-study, your educated guess, your gut feeling, your seventh sense! This is your fuel. You can still involve talented people around you, who are ready to contribute time or their resources, but it’s the fire inside you that determines your capacity to continue working day in and day out. It’s a long-term journey where persistence, commitment, trust, staying fully transparent and authenticity are your biggest assets. There is still much uncertainty, risks, personal circumstances, and many other factors, thus some changes and adjustments are always expected.

Product & market validation. We launched and are testing Lyfery product idea through our website including introduction of the product core idea, asking people to give feedback and arranging 1:1 interviews. Initial findings assure that there is a market potential and need. Our qualitative KPI`s, conversion ratios, and client feedback are all in line with our expectations and targets. Based on client feedback, we can confidently estimate?that as soon as we are able to add even further clarity around product details, pricing, insurance and health partners our qualitative KPI`s will improve. As a next step, we’re aiming to scale visits to Lyfery website across multiple markets. In order to reach that we need stronger leverage and partners, that is market validation through large networks.

Our experience shows that large companies feel hesitant to cooperate with fresh and new start-ups at a very-very early phase (e.g. new business ideas testing). Even if we knew well their executive leaders who liked the idea of Lyfery, expect us to come back when we have a minimum viable product (MVP) ready to be shown. Good point to know. This means that you need to plan product testing based on your own channels, using smaller and well targeted channels and networks. Larger corporations might not be able to support you at your very early phases, but might be very good partners as you progress.

Strategic partners. In our case life insurance partner(s). We are currently looking for a life insurance company as a risk carrier and strategic partner. A company who is open- minded, ready to innovate and who shares the view that the future of life insurance could provide much more than today’s products are providing.

I have to say, I underestimated related complexity here and assumed that the novelty of Lyfery’s business idea and?solid background of Founders will open many important boardroom doors across Europe more easily than the reality shows. While there are many innovative minded strong insurers, their agendas are full, resources booked, competing strategic priorities and technical limitations might exist, geographical targets markets might not match with Lyfery targets etc. Therefore, we have reached an extensive partner search and selection process. We are talking and looking into details and cooperation models with few solid European and CEE region top insurers. We have also investigated and will investigate solutions through reinsurance companies and other insurance ecosystem counterparties. In order to reach the current phase, I have approached close to 100 different people across Europe. Nothing comes easily, it’s hard work and relationship building.

Establishing a partnership with our insurance partner is the main missing puzzle that holds us back from kicking off. We have now several solid options on sight, however if you are an insurer (or can recommend an appropriate one) looking for innovation, want to explore cooperations with Lyfery and we haven’t spoken?– pls do get in touch!?

Similarly, we are in the process of establishing partnerships with our health partners.

Distribution strategy. Life insurance has been historically a push product, involving human intervention and consultation, having high client acquisition costs and low conversion rates. It encompasses an array of legal jargon and is hard to grasp, as its value chain has not been clear for customers.?

We incorporate the entire wellness component and many of its sub-elements in a new way to the offering and thus aim to move the product from typical “push” category, slightly towards “pull” category. This will open-up new distribution channels: B2C (digital) and B2B2C (new digital partnerships, embedded insurance), building leverage and bringing down unit costs.

Technology. It serves as the glue to everything. We have prepared a meaningful, cost-efficient initial data architecture and technology roadmap in a way that reuses base components from strong and solid partners while developing unique proprietary modules in house.

Usually, tech related start-ups have a CTO or CIO background person in their founding team. That is something we have also considered, but right now looking into an alternative direction. This would mean establishing a strategic partnership with a strong tech company and being able to bring in a very different and much wider range of competences and new synergies.

Here, we are very thankful for Net Group?Net Group - Turn your dreams into a solution and their management team, including their?innovation leader Siim Lepisk and team lead Annika Kaarm?e to be ready to explore this path with us and keeping Net Group Ltd friendly office doors open for us.

Cooperation with universities and science centres.?Our R&D grants first experience. Science is another crucial component that we want to incorporate from day one into Lyfery business model. We have managed to build very good relationships with top Estonian universities – especially Tallinn University and University of Tartu and also prepared and applied for a few larger specific grants e.g. EIS Estonian Business and Innovation Agency ?programme for applied research” and also European Horizon III innovation pillar EIT Health innovations call grant. We have also attended many value adding seminars and coaching events with good support from TalTech – Tallinn University of Technology and other partners.

Science and business worlds can and must work together for common good. Science and R&D grants can also support start-up funding in early phases, but of course grants are not guaranteed. We went through severe efforts during the application phases, including strong support from experts involved during the applications phase, though we did not reach final positive decisions during our first trials.

This makes Lyfery’s financial situation more complicated. Same time, we have received a?lot of actionable feedback that will strengthen our overall business model and increase probabilities for future applications. As an alternative approach, we are now replanning and navigating our actions so that we can proceed also without the support of grants. However, our aim is to come back and consider new grants and we are open and look for support programmes that will strengthen scientific components of wellbeing and bridge funding for Lyfery business model.

Here, I want to thank Külliki Tafel-Viia and Ingrid Hindrikson from Knowledge Transfer and Project Support areas from Tallinn University and as well University of Tartu for their active contributions, great insights and readiness to start joint R&D projects with Lyfery and one or the other way our common journey shall continue what we started!

Supportive networks.?We at Lyfery are humbled and proud to be members of?FinanceEstonia?and?Estonian Connected Health Cluster?as of November last year. We believe in the communities, the power of?networks and that common effort increases your probabilities to succeed. There have?also been a?few accelerator and support programmes across Europe and in Estonia which we have been and are considering if to join in addition.?

Funding. At the current moment Lyfery operates based on co-founders own capital. We are building readiness and aim to reach as far as possible across all relevant building blocks and when this is done, we open up a pre-seed?funding round. We have had conversations with investors and can sense the interest, though considering the current climate, the decision to invest is often tied to having the MVP launched.

Capital has cost, price and ownership. Capital has been earned, there is somebody`s hard work behind. We approach funding as a sensitive, delicate matter where our values need to be aligned. We plan to open up a pre-seed funding round when we have a solid plan in place as it relates to partnerships, contracts, technology requirements, distribution etc. We don`t gamble. We need to close a few open areas first before we will open pre-seed round. We don`t target to involve any kind of investments at any price, nor aim for exponential growth at any costs etc. We want to build a long- term sustainable impactful business and give our best efforts for this success.

Final thoughts.??Building a new company is like a marathon, it’s a long term journey with ups and downs.?You can only survive if you have strong persistence, you can handle severe financial uncertainty, you have a team and people around you who are your safety net. You even must accept in your mind the scenario that you may not succeed with your plan, but even in this case you have a peace of mind – you gained extraordinary experience, new knowledge, new networks, new possibilities might open up.?It`s a very volatile environment, adjustments and changes to plans and activities change the reality daily, and keeping multiple working scenarios in process is a must.

Think hard, but don`t overthink. Do it.?Come down from “cloud and bright extensive future” to really practical first solutions you can do quickly. It`s hard, especially if you have corporate business background. There is a good old saying “shots you never do, will never hit”. Lyfery aims for release, despite various challenges we face!

Few specific areas and our priorities where we look for cooperation:

● we are open to talk with life insurers?

● we are open and looking for R&D related support and grant programs

● we are open for partnership with innovative digital wellness and health preventions partnerships

● we are open for discussions around distribution partnerships for B2B2C model??

● we are open (but not fully ready yet) to talk with potential future investors?

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If you managed to read it through, please share your thoughts. Get in touch! Glad to hear! And a lot of strengths for all innovators. It’s not an easy job, but so much needed!