Beam Dental: Brighter Smiles, Lighter Costs
March 31, 2021 | Ashley Brindamour
The insurance industry is improving its capabilities and efficiency through insurtech — the adoption of new technology to improve insurance operations. With the global insurtech market expected to grow 48.8% annually from 2021 to 2028, companies adopting technological advances will grow and improve, while those that don’t risk being surpassed by competitors.
Founded in 2012 by three engineers, Alumni Ventures portfolio company Beam Dental is the dental industry’s first and only digitally native insurer. Beam offers an easy-to-use, mobile-first digital platform that saves time and money for consumers, providers, employers, and brokers. With PPO policies available in more than 40 states and access to 400,000+ dental groups — comparable to all major traditional carriers — Beam is rapidly capturing market share.
Although Beam Dental is the first and only insurtech company in the $70 billion dental insurance space, other insurtech disrupters have grown rapidly in recent years. Insurtech players such as Oscar (health insurance) and Lemonade (homeowner and renter insurance) have quickly developed into billion-dollar companies. Meanwhile, dental insurance incumbents have been slow to embrace technology — ultimately frustrating customers, employers, and medical providers with high premiums and inefficient processes.
Beam’s product experience focuses on ease-of-use, tailored pricing, and preventive care. The company embraces technology to achieve lower operating costs and uses artificial intelligence for more efficient pricing of its premiums. An example of this technology is represented through Beam’s IoT brush.
Beam leverages its signature IoT toothbrush for preventative care and consumer behavior insight. This Bluetooth brush syncs to a customer’s smartphone to monitor brushing through Beam’s app and rewards users with special savings based on their brushing habits.
What We Liked About the Deal
Market Ripe for Distribution: A $70 billion market with low-tech incumbent players is ripe for disruptors such as Beam Dental. By not innovating, traditional insurers risk losing the next generation of customers: the digitally savvy Millennial and Gen Z consumers who make up 40% of the U.S. workforce.
Strong Commercial Traction: Beam grew its revenue from $7 million in 2018 to $45 million in 2020 despite COVID-19, and it is forecasting continued strong growth into 2021 and beyond. In addition, Beam’s loss ratio — a key insurer profitability metric — is already better than the industry average. It also enjoys a lower cost structure and net dollar retention of >100% across all cohorts.
Experienced Team: CEO and Co-Founder Alex Frommeyer brings startup experience and comes with a technical background and a passion for healthcare and technology. CFO Paul Sveen was CEO and CFO at several financial institutions, spent 19 years at Lehman Brothers, and has worked closely with insurers.
Participating Investors and How We Are Involved
Beam Dental is backed by Drive Capital (founded by partners from Sequoia), Kleiner Perkins, Mercato Partners, and industry giants Nationwide and The Western and Southern Life Insurance Company.
Alumni Ventures’ Blue Ivy Ventures (for Yale alums and friends of the community) and sibling funds deployed capital in the company’s recent $80 million Series E. The round was led by Mercato Partners, a growth-stage focused VC firm with successful exits in fintech and health-tech sectors.