Aerial view of a repair vehicle at sunset passing near beachfront homes burned by the Palisades Fire as wildfires cause damage and loss in the Los Angeles area in Malibu, California, January 15, 2025.
Tama Mario | Getty Images
In mid-December, technology entrepreneur Dan Preston debuted the first product from an insurance startup focused on protecting property in wildfire zones. They had months of time to work with potential customers and market their products before devastating fires broke out in the United States.
In Stand’s home state of California, fire season typically starts in early summer and lasts until October or November. Stand, which Preston co-founded early last year, announced a $30 million funding round and new products on Dec. 16, just days before the official start of winter.
However, it was an unusual winter. Three weeks after the stand was launched, wildfires tore through parts of Los Angeles, killing more than 20 people, burning approximately 41,000 acres in polar winds, and destroying at least 12,300 structures.
“This is certainly not a time when you would normally see something like this happen,” Preston said in an interview this week. “This accelerated business in a pretty massive way. As soon as this started happening, inbound demand increased about five to 10 times overnight.”
For more than a decade, Preston has strived to innovate the typically boring and slow-moving insurance industry. In 2013, he became head of technology at auto insurance startup Metromile, then CEO, and led the company to the public market in 2020 through a special acquisition purpose company (SPAC). Metromile fell on hard times after its SPAC and was sold to tech-enabled insurance company Lemonade in 2022. Mr. Preston remained at Lemonade for another year.
On the stand, Preston is aiming to make a big splash in a market where traditional insurance companies are rapidly exiting because the risks are too high. As of mid-2024, at least eight insurance companies had either exited the state or restricted their coverage. California Fair Plan, generally considered the insurance company of last resort, has posted a 137% increase since 2019, and this was well before the recent Los Angeles fires. According to LendingTree, about 10% of Los Angeles homes are uninsured.
It’s no surprise that companies are leaving the state. goldman sachs Insurers estimate that they could face up to $30 billion in losses related to LA. A fire breaks out.
By combining technology and reimagining home insurance, Preston wants to provide affordable protection to homeowners in wildfire zones.
Stand CEO Dan Preston (previously CEO of Metromile)
winnie wintermeyer
It is important for property owners to be aware of the changes they need to make to their home and surrounding land to reduce the chance of a fire spreading out of control. That could include pruning trees, replacing wooden fences with steel ones, or adding concrete barriers between homes. Stand uses artificial intelligence and what the company calls “physics-based insights tailored to each property” to create specific mitigation recommendations to make a property insurable.
Mr. Preston said the company, which currently has 13 employees, has insured only a few properties so far but is negotiating with hundreds of potential customers. That number is increasing dramatically as property owners begin to understand the impact of the Los Angeles fires, he said.
“It’s going to be much harder to find insurance for the next few years because of what happened,” Preston said. “In a way, we have a responsibility to bring insurance back to the market and further our ambition.”
avoid bottlenecks
Bill Clerico, Stand’s co-founder and one of its early investors, expected a busy January, but for very different reasons. He and his wife just had their second child. And on Jan. 7, Clerico’s fire technology-focused venture firm, Convective Capital, filed to raise $75 million for its second fund.
Clerico said he can’t speak to Convective’s funding at this time, but is using the disaster to raise awareness about wildfire mitigation strategies and some of the tools and techniques available. . In a Jan. 8 post on and a reduction in fires caused by public facilities.
“The bottleneck is primarily in adoption and deployment, and many of these technologies are not cutting edge,” Clerico said in an interview. “Drones have been around for decades, satellites have been around for decades. It’s cameras and software that permeate every aspect of society in hopes of public safety.”
Before launching Convective three years ago, Clerico was co-founder and CEO of fintech startup WePay, which he sold. JP Morgan Chase In 2017, he spent more than three years as a managing director at a Bay Area bank.
Mr. Clerico lives in San Francisco and has a cabin in Anderson Valley, about 185 miles north of the city. He said wildfires there in 2018 inspired him to volunteer with the local fire department, which led him to start investing in the area.
Venture capital has focused on clean technology in recent years, but has largely avoided investing in companies focused on resilience and adaptability, largely because buyers are focused on “utilities, government, insurance, etc.” “It’s a fairly large and slow-moving institution,” he said. .
Clerico said what makes Stand unique compared to other tech startups that have tried to break into insurance is that it has less competition in its target market, not more.
“Incumbent insurance companies are not competing and are exiting,” Clerico said. “If you have a better-informed view of risk, it becomes a better place for startups.”
However, it is a very tough market.
The stand is currently focused on homes valued between $2 million and $10 million, and Preston said it will also include properties facing a number of “challenges.” The company is working with a number of reinsurance companies and hopes that once the model proves to work, it can reduce costs.
But making a meaningful contribution to the larger problem will require major changes in the behavior and structure of neighborhoods that, like the Pacific Palisades of Los Angeles, are in danger of suddenly disappearing almost overnight. Its mission must be more than protecting individual homes at once.
“If we can work with neighbors and require homeowners and city officials to design for neighborhood resilience, we may be able to play an even bigger role in safety,” Preston said. Ta.
WATCH: When the fires subside, rebuilding Los Angeles will be the most pressing issue
