Post-TradeTapp, Shepherd CEO Justin Levine Shakes Up Slow Moving World of Construction Insurance

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Today was moving day for San Francisco-based construction fintech startup Shepherd, a company that bills itself as the first MGU for large scale commercial risks that provides proactive solutions to drive premium savings for clients. It is a bit of a mouthful, but in building a new insurance company for the industry from the ground up, Shepherd hopes both to offer its own software solutions and also to leverage a broader ecosystem of technology solutions to generate greater efficiencies, lower risks and ultimately lower premiums for its customers. It is a formula that is gaining traction, as evidenced by the firm’s $13.5 million funding round announced last month, and also by today’s ceremonial move out of one of San Francisco's many WeWork locations (pictured above) and into larger offices of its own.

We visited with the company ahead of our Venture West conference there in a few weeks. 

Shepherd is a second act for its CEO Justin Levine and builds upon his prior risk management industry experience. Levine previously co-founded vendor qualification and management software TradeTapp, a system that was acquired by bid management system BuildingConnected and subsequently merged into Autodesk’s construction suite. Moving into risk strategy at BuildingConnected while at Autodesk, Levine saw how insurance companies and construction companies were each viewing risk. Partnering with Shepherd co-founders Mohamed El Mahallawy, a former product engineer at AirBnB who joined as CTO, and Stephen Buonpane, formerly executive vice president and construction industry practice leader at leading insurance underwriter Chubb, the three launched this new insurance company in 2020. Beyond prior Bay Area startup experience, Shepherd gained a big lift by graduating from Y-Combinator in 2021. 

An Actual Insurance Company, Tech-Enabled

Despite the software background, Shepherd is actually an insurance company. The technical term for the business is an MGU or Managing General Underwriter. An MGU is an organization that can underwrite insurance within certain parameters on behalf of insurers and also perform certain administrative tasks. In the case of Shepherd, the idea is that it has developed specialized tools and systems that allow it to be faster and more efficient in underwriting. The company also believes that it can predict a better experience for companies that use the suite of solutions Shepherd partners with, leading to lower premiums and a better book of business for its insurance partners.  In theory, it could be a win-win for all involved, and so on the one hand, Shepherd is partnering with software firms such as Autodesk, PROCORE, OpenSpace and Samsera. On the other hand, Shepherd has also formed partnerships with leading brokers such as Marsh, AON, Lockton and Alliant.

Gaining Customers Today, While Creating Possibilities for the Future

There are a number of interesting possibilities for Shepherd, going forward. Customers currently can opt in to allowing Shepherd access to their risk management systems. Over time, if contractors are comfortable with that option, it could open the door to opportunities for Shepherd to work more directly with its customers to help them manage risk. Additionally, as Shepherd deploys more tools for its contractors to manage their risks, it may eliminate the need for contractors to spend more on other software solutions, essentially giving away software solutions as value add offerings.

Looking ahead, Shepherd might also be able to gather experience data correlated to usage of certain solutions to push for further reductions in premiums. This last area of opportunity is something of a holy grail for the industry. It will take time, but it is possible that as artificial intelligence evolves and, if Shepherd is able to gain the trust of its insured, insurers and tech company partners, it may be able to play the critical role of integrator and interpreter of the industry's risk data, and ultimately perhaps find the keys to helping the industry leverage technology to drive down its incidents.