It’s the million dollar idea formed over a glass of wine at a house party.
Butter, the brainchild of former lawyers Cassie Bell and Steph Skevington, is this week named one of The Australian’s Top 100 Innovators, after last year raising $1.3m in a funding round from Startmate and Quokka Ventures.
Aimed at young people and billed as “insurance for the stuff you actually care about”, Butter allows its customers to insure single products like iPhones, GoPros, earpods and laptops in less than two minutes.
Bell and Skevington came up with the concept over a kitchen table after Bell had broken a pair of expensive earrings, and Skevington had totalled her laptop.
Bell had found the insurance process painful, with one provider calling her eight times just to get the ball rolling.
The pair describe their million-dollar start-up “AppleCare meets Afterpay”.
“We were basically drinking wine and complaining to each other about the expensive things we had broken,” Bell said.
“At the time, there wasn’t anything on the market geared toward younger people. There was nothing you could manage like a subscription. We thought it would be super cool to embed that insurance into a checkout,” she said.
“Insurance is the un-sexy corner of financial services that has been ignored for too long. Our goal is to provide more tailored ways for people to insure only the things they care about. Whether that’s their laptop, jewellery, snowboard, the customer is in complete control.”
Butter offers monthly or yearly insurance products on products, which users can turn off via what Bell describes as a “sexy app”.
“Eventually you can have your snowboard and your laptop policies all in the same platform, all of which are not locked in, cancel anytime.“
The pair’s $1.3m fund raise, which also included financial backing from Flying Fox VC and FB10X adVentures, was far from straightforward.
They went into their first investor meeting with a hot pink PowerPoint presentation, which they now look back on as disastrous.
Later, one investor pulled out of the funding round at the last minute, telling them that their idea wasn’t likely to succeed.
Bell and Skevington spent half an hour in tears and now mark that occasion with a tongue in cheek ‘Annual Grieving Day’, and say they raised the funding “at the absolute worst time.”
The last year has been a torrid time for the local start-up sector, with rising interest rates making investment harder to come by, but Butter is one of a number of new companies to survive through the downturn.
The pair have also since scored a partnership with Australian Payments Plus, giving consumers the option to make payments with their smartphone by scanning a QR code at EFTPOS terminals.
Skevington and Bell, who completed Startmate’s Winter Accelerator program, worked for MinterEllison and Gilbert + Tobin respectively, quitting their roles in 2021. They‘re now tackling a huge market opportunity, with GlobalData research showing the Australian general insurance industry will hit a market valuation of almost $86bn by 2026.
“Research has shown that having an insurance option at checkout can increase spend and improve customer loyalty. However, a lot of retailers do not want to venture into insurance as it detracts from their core business offering,” Bell said.
“We are offering a plug-and-play solution with a fresh brand that speaks to customers.”
Skevington is quick to point out ‘this is not another dodgy warranty product’.
“The Butter app allows our customers to know exactly what they’re covered for. They can log on, add insurance on an item, turn it off, make claims and manage payments without a single email or phone call. It works like any other subscription service,“ she said.
“Our policies are also designed to meet the lifestyles and expectations of our customers. You’re covered for accidental damage and theft anywhere in the world, not just the four walls of your home, which really matters when you’re walking around with an $1,800 phone in your pocket every day.
“We’ve created Butter to improve financial wellness — to proactively protect what matters for a few dollars a month, instead of putting thousands of dollars on a credit card to replace an item when accidents occur.”
The List: Top 100 Innovators 2023 launches online and in The Australian on Friday, September 15. It is a celebration of Australia’s boundary pushers and fierce innovators.