Besides the number of times you’ve been on the Midas List, the real mark of honor for any venture investor is what’s in your “anti-portfolio”, i.e., the investments you should have invested in but for some reason decided to pass. And while everyone’s ringing the bell at the NYSE, you’re stuck at home wondering where it all went wrong.
I first met the Noyo co-founders, Shannon Goggin and Dennis Lee when they were raising their seed round back in 2018. From the first meeting, it was clear the founder-market fit was undeniable. Shannon and Dennis previously worked at Zenefits, where they worked on integrating and automating connections with insurance carriers. They felt the pain first-hand of having to deal with outdated pen and paper, fax(!), and decades-old electronic files transfer technology. They uniquely understood the problem and how it was only a matter of time before benefits platforms and carriers would need to adopt a digital data exchange solution.
At the seed stage there’s a million things that could go wrong at any given time and it’s easy to justify passing with concerns about market size, product, team, distribution, competition —the list goes on. But often, the trickiest part for any startup is nailing the market timing — predicting when customers are ready to adopt a specific product or technology.
Back in 2018, I was skeptical that the benefits ecosystem was ready to adopt Noyo’s technology. Carriers have notoriously complex technology stacks and technical debt, exacerbated by years of acquisitions (and non-integrations), a lack of industry standards and a convoluted network of providers, software platforms, brokers, and administrators —all with different transfer processes. Although I loved the Noyo team, their product vision, and potential business model, I regrettably passed because the market timing didn’t feel right.
Fast forward three years and a pandemic later, it’s clear the world has changed and I was sorely wrong. Employer workforces have continued to grow while an expanding array of benefit offerings, decentralized teams, evolving state/local regulations, and employee demands have made benefits administration overbearingly complex. Thankfully two thirds of employers now report that they have shifted their benefits processes to digital offerings and are experiencing UX and efficiency gains.
Although the migration to digital processes for managing group benefits has been gaining momentum, digital connectivity between parties remains shockingly low — leading to incorrect rate information, out-of-sync plan configurations, broken rules or incorrect product details. Now, according to a recent Guardian Workplace Benefits Study, more than 50 percent of high-growth employers report that they would switch to an API-connected carrier, yet fewer than 5 percent of all employers manage any aspect of their employee data with APIs.
It’s now clear that the next step in the digital evolution of benefits administration will be real-time connectivity between platforms and carriers, specifically the adoption of API interfaces for exchanging information.
Over the past decade, we’ve seen firsthand how APIs can accelerate innovation across a number of industries by providing cost-efficient, accurate, and real-time feedback. The timing has never been better for the benefits space to make the leap. Noyo’s product manages data exchange between HR software and insurance carriers, processing any enrollment or policy changes and keeping systems in sync throughout the year. Noyo makes benefits data usable by programmatically detecting and interpreting changes across systems, creating an ~85 percent improvement in processing time over alternative solutions.
When I reconnected with Shannon and Dennis last year, it was clear that the market was now there. They are building a true “painkiller” product that will become mission-critical for policy administration. Carriers and benefit software customers are now adopting Noyo’s technology at an accelerating rate and the value proposition continues to grow as each node expands the network for all. After hearing about Noyo’s solutions that are designed to work with a variety of customers of different sizes and needs, I knew right away I wanted to invest.
As much “fun” as it is to lament your anti-portfolio and brag about the “one that got away,” second chances to jump onboard a rocket ship are rare and I’m beyond thrilled to have the opportunity to partner with Shannon, Dennis, and the entire Noyo team as they realize their vision of modernizing connectivity for the entire benefits ecosystem.