Dynamis Software, whose technology allows insurance brokers to design and evaluate health plans for the organizations they sell to, has raised more than $529,000 in equity financing, according to a regulatory document filed Tuesday.
Dynamis will use the money to help fuel the West Allis, WI-based company’s growth, says co-founder and CEO Andy Nunemaker.
“We’ve hit a point where the market is responding,” Nunemaker says. “That’s the point, in our opinion, that you go pedal to the metal, to grow the company.”
The new financing came from five investors, according to the filing. It follows a $2.1 million seed round, closed in 2014, that included both debt and equity funding.
Nunemaker says that Golden Angels Investors—based in Brookfield, WI, another suburb of Milwaukee—provided some of the funding, but he did not say the exact amount.
Dynamis, launched in 2012, develops software that insurance brokers and agents can use to compare the different health plans available to their customers, most of whom are employers. The concept was born at Servant Insurance, a brokerage in Franklin, WI, my colleague Jeff Engel reported for the Milwaukee Business Journal in 2013. Servant CEO Mark Priestaf is also a co-founder and president of Dynamis, according to his LinkedIn profile.
Nunemaker is an Xconomist and a former GE Healthcare executive who is building his second startup. He says he didn’t have an insurance background prior to Dynamis’s launch, but he was able to surround himself with a team that together had decades of relevant experience.
“We had brokers that saw a gap in the marketplace, went out looking for a solution that did what Dynamis does, and couldn’t find it,” Nunemaker says. “They said, ‘Hey, we could turn this into a business.’”
Nunemaker says that with companies like Northwestern Mutual and Connecture (NASDAQ: [[ticker:CNXR]]) located nearby, the Milwaukee area is showing signs that it could become a hub for innovation in the insurance industry.
“It’s happened here in medical devices, it’s happening here in insurance technology, and it will definitely happen in other technologies,” he says.
The new cash should allow Dynamis to grow at its desired pace without taking additional outside investment, Nunemaker says.
Employees of Dynamis no longer consider it a startup, says Nunemaker, who believes it has entered the “growth company” phase.
“The startup phase is experimentation,” Nunemaker says. “You look at two things: customer acquisition cost and the lifetime value of the customer. Once those things fall into range, then you’re at a point where you can scale [up].”
Putting things in simpler terms, Nunemaker uses a fishing analogy to describe the progression.
“If I asked you what number cast you’re going to get a bite on, you can’t answer that,” he says. “That’s the startup phase: throwing out the lure, testing, trial and error. But when you’ve got the fish on the hook, you know what to do to reel it in.”
