We’re thrilled to be launching our second Bristol coworking site, Runway East Temple Meads, this December! Bristol’s entrepreneurial scene is thriving, so we’re chatting with Bristol’s leading startup founders to uncover the unorthodox stories behind the city’s success.
We sat down with Ben Allen, co founder of Laka, the transformative bicycle insurance company that is powered by the customer (in this case, the rider). With £1.8 million secured and more fundraising in the works to fuel their expansion – Laka is riding the waves (er, roads) of success.
Hi Ben! We have to start by asking you what kind of bike you ride and why?
I have a road bike, a Genesis Equilibrium 10. I used to cycle to commute most of the time and when I co-founded Laka I inevitably got sucked more and more into cycling, and now it’s more of a hobby and less about the commute.
Laka is bike insurance powered by the community. Shares go up and down (even £0!) based on the amount of claims made by cyclists. How did this business model come about and how does it work?
The initial idea came from my co founder, Tobi. He was working for Barclays and saw all this innovation in fintech, but nothing exciting happening in insurance and he thought “maybe there’s another way to go about it”. Laka has all the same parts but we’re re-thinking insurance centred around the customer. The core problem is that, because you pay upfront, the customer is always in the worst position. When it comes to claiming, you know and the insurance company knows that if they pay out, they’re affecting the bottom line. They may want to give you a good service but you can’t really fight that core conflict of interest.
Laka was born out of the idea that we should do this in a different way. Instead of asking for premiums upfront, we onboard people into similar groups, so that you get a sense of belonging to the community, and increasingly it will be with people who cycle in the same patterns and have the same kind of involvement with the sport. We settle claims as they come in over the course of the month, and at the end of the month we take the cost of claims we’ve had that month, we add a percentage fee on top and then we split the bill pro-rata between the people in the group.
That means you pay a fair price based on the actual losses that have occurred in the group. We are incentivised to pay out, within reason, and the way we police ourselves is that there is a cap each month on how much a customer has to pay. So you’ll never have to pay more than that cap.
What type of rider is most risky to insure?
We draw the line at anyone who is paid to participate in the sport, but up to that point, almost anyone goes! There isn’t a higher or lower source of claims. We do cover people who race and the risk is higher for a brief period of time. But they might be on their bike less than someone who commutes every day for 10 miles each way. So we haven’t seen any particular patterns so far. That’s largely down to the fact that we’re appealing to people who have a common interest and a shared passion for riding; their bike is important to them, it’s fitted to them and they take pride in that and want to protect it.
Do you see more cycling accidents in winter or summer? Our guess is winter…
We see many more in the summer – people tend to cycle less in the winter so the people who DO cycle through all weather are likely more aware of the risks and take the appropriate precautions to do so. It’s the volume of claims that pushes the price up in the summer, and down in the winter.
When it rains in London – countless cyclists hang up their helmet and take the tube. Is there a safe way to cycle in wet weather?
Lots of people tend to avoid it but I don’t think there is a huge safety reason behind it – just that it’s not nice to be in the cold and wet. But generally speaking, if you avoid manhole covers, drains and other slippery places, you should be fine. Know the rules of the road and don’t get forced into the edges – better to be in someone’s way than to get forced off the road! I personally enjoy riding in the rain!
How do you see cycling transforming in the coming decades, especially in the midst of global warming?
Cycling is still growing massively, across the world. It’s an obvious alternative, it gives you some of the speed without the carbon footprint. E-bikes are an exciting area for us, they’re growing massively in the rest of Europe. it’s a game-changer that brings cycling to people who might not have the physical ability or opportunity to get involved. E-bikes bridge that gap.
What do you think is holding people back from starting to cycling to work?
There is a bit of fear, especially in cities – it can be quite intimidating. There is still a ‘them and us’ attitude on the road. I used to cycle in London and saw just as many bad cyclists as I did bad drivers. But as long as everyone is tolerant and understanding that everyone has a right to use the road and is using the road properly, it doesn’t matter. Cycling is incredibly safe as a hobby and a mode of transport.
Cycling in Bristol has to be a good time. How’s it compared to London?
There are a lot more hills! You can get out of the city a lot quicker from Bristol to the countryside. It’s great cycling terrain. And it’s a great challenge. The infrastructure is on par with my experience of London in Bristol and there’s definitely a big cycling contingent. About half of our team cycle to work on a regular basis.
Alright, a bit of a speed round about your own cycling habits…
What would be your favourite ride you’ve ever done?
I did a 100-mile ride from Northeast London through the city and then looped round to Windsor. It was a long, hard day and it was raining for most of it and it was probably the most fun I’ve had on a bicycle.
Ever had an accident?
Yes, on that exact ride! I was coming down a hill with a t-junction at the bottom of it and I was wearing my ‘high invisibility’ vest and a lady didn’t see me and just pulled out in front of me – I hit the side of her car at 20 miles per hour. I was very lucky to walk away with no injuries and very little damage to my bike! I just found myself on the floor wondering what had happened.
Jeez. Bouncing off of that…helmet or no helmet?
Helmet. I’ve read lots of evidence to say it doesn’t make much difference but I wear one just in case – you never know what will happen. You’re exposed on a bike so I’d much rather have something to land my head on than not.
Bluetooth while riding or no Bluetooth?
No Bluetooth. I don’t have anything in my ears. I’d much rather hear what’s going on around me and be aware. I did experiment with the bone conduction headphones but it wasn’t for me.
Nice. Lastly, your team just moved into a bigger office at our Bristol Bridge location. More plans for expansion?
We’re looking to expand into Europe in 2020! Our tech team is in Bristol and we plan to keep it there. Expansion will bring some new challenges and different requirements, and we’re going to gradually grow the team as we have a bit more of a demand. We’ve talked about bringing some customer support and claims handling in the West Country as well.
Any more funding in the works?
We’re closing some funding right now! Stay tuned…
More From the Runway East Community
We’re thrilled to be launching our second Bristol coworking site, Runway East Temple Meads, this December! As the entrepreneurial scene in Bristol continues to thrive, we’re chatting with Bristol’s leading startup founders about their unorthodox success...
Congratulations to RWE Bristol Bridge members Immersive Labs who have recently closed a $40m Series B round.The cyber security platform was backed by Summit Partners and existing investor, Goldman Sachs. This is Immersive Labs second fund raise this year -...
We're thrilled to be launching our second Bristol coworking site, Runway East Temple Meads, this December! As the entreprenurial scene in Bristol continues to thrive (hello digital tech productivity powerhouse), we're chatting with Bristol's leading...