Functional Finance, an insurance software platform, has secured $8m in seed capital, accompanied by an additional $2m in SAFE notes earmarked for future equity investments.
This funding injection has been earmarked by the startup for the advancement of product development and the strengthening of client relationships.
Venture capital and growth equity leaders New Enterprise Associates (NEA), Walkabout Ventures, and Altai Ventures spearheaded the fundraising round. The backing also includes participation from influential figures such as industry heavyweight Hank Greenberg’s C.V. Starr Insurance, among other premier investors.
Founded in 2021 by seasoned technology executive Tony DeGangi and accomplished insurtech entrepreneur Rashmi “Rush” Melgiri, Functional Finance is on a mission to revolutionise the operational landscape of the insurance industry. Drawing from years of firsthand experience grappling with insurance technology challenges, the co-founders are determined to streamline and simplify the intricate processes inherent to the sector.
The leadership team comprises industry veterans. CEO Melgiri, a co-founder of CoverWallet, is joined by CoverWallet’s former president, Jim Ermilio, now serving as Functional Finance’s President. DeGangi, an accomplished CTO, was previously the co-founder and CTO at Renew.com, an online Medicare brokerage platform.
Functional Finance CEO Rush Melgiri said: “At my last startup I realized firsthand that spreadsheets and emails are terribly inefficient, error-prone and costly ways for the insurance industry to manage their payables and receivables.
“You can build fast-growing businesses and take payments online but reconciling that on the back end is often overlooked and deprioritized, leaving it to intensive manual labor. There was a tremendous opportunity to create an automated technology solution that will make the industry move faster, and the experience should be more efficient and positive for clients and customers.”
At its core, Functional Finance’s technology seamlessly integrates within the financial tech stack of corporate partners. It offers a comprehensive suite of functionalities, including billing and invoicing, premium collection, financing, reconciliation, payables processing, reporting, and integration with the general ledger.
This automated and interconnected platform delivers unparalleled visibility at both the policy and account levels.
One of the standout features of Functional Finance is its dedication to serving the insurance industry exclusively. Unlike other software solutions that may focus on isolated aspects of financial management, Functional Finance provides a unified, real-time overview for reinsurers, carriers, MGAs, wholesalers, and brokers.
The platform’s adaptability is a cornerstone, engineered to cater to the diverse operational models prevalent in the insurance sector. The impressive roster of seed investors includes prominent figures from the software and fintech arenas, cementing Functional Finance’s position as an industry leader poised to drive transformative change.
NEA technology investing head and partner Rick Yang said: “The Functional Finance team has created a breakthrough technology that we believe will drive positive experiences and outcomes for the insurance industry, which has historically lagged in adoption of new technologies.
“Rashmi, Tony and the Functional Finance team bring valuable experience and a deep understanding of industry-specific opportunities, and we are thrilled to partner with them to modernise insurance data and reporting.”
