Our Investment in Zego
Self employment, the often ignored little brother to public and private employment, is having a growth spurt. 4.9 million people were self employed in June 2017 — that’s 15% of all people in work. This compares to 5.4 million employed in the public sector. And that gap is closing fast.
On-demand platforms are driving the most significant shift in the way we work since the emergence of the welfare state. Digital platforms, such as Uber and Deliveroo, are driving an increase in self employment of 70,000 people per quarter. At the same time public sector employment has fallen to a 70-year low as a share of the labour market. Next year just happens to be the 70th anniversary of the creation of the NHS — the largest employer in the UK with 1.6 million employees and the cornerstone of public sector employment. It is highly likely that over the course of its anniversary year, the number of self-employed will overtake the entire public sector workforce in the UK.
This shift in the nature of work presents challenges for policy makers — the Taylor Report into the implications of new forms of work is a promising start. It rightly highlights the challenge of one-sided flexibility where employers seek to transfer all risk to workers in ways that make people’s lives insecure. The gig economy also challenges the incumbent financial service providers that are part of the social safety net in a traditional employment relationship. Take insurance — financial products should reflect the life or asset that they’re protecting. Existing annual insurance products with fixed monthly bills are designed for employees who receive a traditional monthly salary. For gig economy workers that should mean a flexible product, proportionate to hours worked.
Enter Zego.
Zego designs people-first insurance. Their first product is hourly vehicle insurance for drivers using cars and scooters for food delivery. For drivers, this means that whether you’re working one hour per week, or full time, you only ever pay for the insurance you need. Over the next year, the Zego team will be applying the same approach to build other products needed by gig economy workers — including personal and professional liability insurance for the self employed, a flexible insurance product for car fleets and new products for taxis and van drivers.
Founders Sten and Harry worked together at two sharing economy platforms — One Fine Stay and Deliveroo. While at Deliveroo, they noticed that delivery drivers were increasingly frustrated by the insurance products they were using. Just over a year ago, they teamed up with CTO Stuart Kelly to develop a better solution. They created Zego to be the easiest way to get insured and get driving.
LocalGlobe led a seed round in Zego earlier this year and we’re excited that Balderton will now be supporting the company through their next phase of growth. Zego has been a good example of the way we play total football: the support we provide to a portfolio company inevitably comes from multiple members of our integrated investment and operations team working together. Ophelia Brown and Tara Reeves first met the founders late last year. My partner Tara has a deep understanding of the insurance space — her first jobs out of university were at Aon and Wachovia, and as a cofounder at peer-to-peer car rental company RelayRides (now Turo) she worked to get drivers ensured on the platform. Emma Phillips has been providing operational support as the team grows from Seed to Series A. Venture Partner Remus Brett who cofounded Finalta, a financial services benchmarking company, offered advice around partnerships. More recently, Robin Klein and I have had the privilege of having a front row seat.