How do you know when the time is right to strike out on your own? It’s the age-old question facing budding entrepreneurs. But for Ben Davis and Dan Ross, co-founders, and CEO and CTO respectively at the newly launched digital assets insurance brokerage Native, the answer was in the demands of their industry contacts in the web3 world who, “had been asking us to do this for years”.
Backed to the tune of $2.6 million by Nexus Mutual, Native is the first brokerage to bridge traditional insurance with onchain capital in order to tackle the problem of underinsurance in the digital asset industry. It all started when they were looking at the market map of the entire crypto ecosystem – from exchanges, custodians, hedge funds, VCs, NFT studios and media platforms – noted Davis (pictured right).
Among them, it was clear that there were two or three big names that were native to the crypto industry and had built their business with that technology embedded from the ground up. “We saw that every vertical of that map had a couple of names, except for insurance,” he said. “There was no regulated insurance entity that was built from the ground up with onchain functionality incorporated within it.”
Combining that information with a body of work he and Ross had completed a few years ago looking to predict how crypto insurance would develop, they realized that a lot of their predictions were starting to occur, and so the conditions were perfect to launch a dedicated broker for the digital asset community. “Dan and I have been in this space for about eight years, in crypto and insurance, and what we realised was that there is probably no more excluded asset class in the entire world than crypto.
“Even though crypto is about 16 years old at this point, we are still massively under-insured. By all accounts, we are about five to six times under-insured, compared to other traditional industries. We felt compelled to be the answer for this community by providing the risk management and risk transfer solutions they need to get to the next step, because we view insurance as the last hurdle between the crypto ecosystem and gaining major adoption.”
Almost every other industry out there has a liquid insurance market to back their growth, he said, and if there’s no liquid risk transfer market then inevitably the growth of crypto will be stunted. Without that backing, how can it ever realistically reach its potential in terms of investing in people, new technology and new ways of working?
Adding his perspective, Ross (pictured centre) highlighted that insurance in London is celebrating its 336-year anniversary this year. The market exists not just to provide a good or a service, he said, but essentially as a force for public good, as a social safety net allowing civilisations to progress. By supporting the evolution of new technologies and enabling people to try out new ventures, insurance has supported the wildest ambitions of mankind – whether that’s to travel to the moon or plumb the depths of the oceans.
“Insurance has always been there to understand the risk and help people push civilization forward, not just one business for themselves,” he said. “They never did that for digital assets, and it's pretty much the only industry we can think of where they didn't come out in full force to provide the safety net so that we can really revolutionise things. They almost saw it as this fad that needed no protection because it wasn’t going to be around in the long-term. I think that’s a very short-sighted view. And it's us, and a few key players who are trying to put the safety net in place for the whole industry so it can survive the long haul.”
What has been interesting to see, Davis noted, is that what innovation has occurred in the insurance ecosystem has been largely driven by the insurers. A lot of the brokers haven’t done anything new in a long time, he said, they haven’t secured major tech partnerships or invested in major product innovation. The broking market has been quite slow to innovate, and it was seeing that which prompted him and Ross to take a leap of faith and determine the time was right to launch Native.
“We recognised that we’ve got to do this and then everything just kind of aligned,” he said. “The narrative around digital assets is changing. You’ve got more institutional money coming in and more insurers starting to wake up to this so there’s more capacity now in the market. And among our own network, we had people we know start to quietly nudge us in the direction of doing some new and cool things in this space.”
Ross noted that having had the privilege to work in the market for the last eight years or so and build a reputation, and establish a great support network meant that when the time was right, Native was ready to go. “We know that having the right level of support is invaluable, otherwise we might never have got to the point we recognised it as the right time,” he said. “We might have launched too early and failed. We might have launched too late and missed the boat. We knew the time was right because there was no good reason not to launch, we have every single signal giving us the greenlight.”
