Deal Memo 

Publication Date: 02/10/2025

FundNV 2 and The 1864 Fund are participating in KnowRisk's seed round with a combined $600,000 investment. We've secured a matching investment of up to $500k from the State of Nevada SSBCI program – providing further capital to accelerate KnowRisk's growth while strengthening our investment position. KnowRisk has $2M remaining in their $5M seed round. Between FundNV 2, The 1864 Fund, and the State of Nevada, we have $1.1M of that $2M committed. Through KR Investors SPV, we're pooling additional capital for maximum impact.

Why KnowRisk

Our comprehensive due diligence underscores KnowRisk as a category-defining company in the insurance technology space. Their AI-powered platform addresses a long-standing industry bottleneck: the time-consuming and error-prone process of crafting legally compliant claims correspondence. KnowRisk is already proving its potential, with three paying insurance carriers (including the publicly traded Heritage Insurance) and recurring revenue of $22,000 projected monthly just from these first customers (not including catastrophe related usage). The company’s strong sales pipeline includes three additional pilot programs with major carriers expected to convert into paying customers and verbal commitments from more carriers launching pilots in 2025. A Texas-based state carrier estimated it would have saved $2.4M in one year after paying $1.2M for KnowRisk’s services. This growing demand reinforces their product-market fit and scalable business model.  

The leadership team combines deep AI expertise and industry-specific knowledge. CEO Yo Sub Kwon brings a track record of building and exiting successful AI and cybersecurity startups, while Bryan Layne’s 15+ years in insurance claims adjustment and risk management anchor KnowRisk’s approach in the operational realities of the industry.

Their strategic vision includes expanding beyond their initial property and casualty (P&C) insurance vertical into auto, liability, and medical claims, for example.  KnowRisk’s first-mover advantage is especially compelling in a market with no direct competitors addressing this specific pain point. By automating a critical but overlooked aspect of claims processing, they are capturing value where incumbent insurtech firms have been slow to innovate.

Just as Salesforce transformed their CRM tool into a multi-product ecosystem, we believe KnowRisk has the potential to expand its AI-driven capabilities into other areas of insurance claims, as well as general insurance operations, such as underwriting. This evolution could unlock massive growth potential beyond their already compelling trajectory, making KnowRisk not only a strong early-stage investment but also a potentially foundational player in the modernization of the insurance industry.

Below are detailed diligence reports and investment documentation for SEC Accredited or Nevada Certified investors ready to take advantage of this opportunity.

KnowRisk Pitch

Use Of Funds

Founding Team

Yo Sub Kwon, Co-Founder: A seasoned entrepreneur and expert in AI, cybersecurity, and fintech, Yo has been building scalable, secure systems since 2008. He is the co-founder of multiple successful startups, including LaunchKey, Coinsetter, and Hosho Group, achieving multiple significant exits. Yo's technical expertise and proven track record in building enterprise-grade solutions provide KnowRisk with a strong foundation in both product development and strategic leadership.

Cylus Watson, Co-Founder: Cylus is a serial entrepreneur with a strong background in AI and business strategy. He has founded a consulting firm and two hedge funds, where he leveraged emerging technologies to create business value. His expertise lies in identifying and executing on high-growth opportunities, as well as scaling early-stage companies. Cylus’s ability to align cutting-edge technology with market needs has been pivotal in positioning KnowRisk as a first-mover in AI-driven claims automation.

Bryan Layne, Co-Founder: With over 15 years of experience in the insurance industry, Bryan brings extensive domain expertise in claims adjustment, risk management, and operations. He holds an MBA and a degree in Investment Finance and Risk Management, which have supported his deep understanding of industry pain points and the operational complexities of claims processing. Bryan’s relationships with insurance carriers and adjusters have been instrumental in driving KnowRisk’s early sales traction and market entry. 

Go-To-Market Plan

KnowRisk’s go-to-market strategy is focused on direct sales to insurance carriers and third-party administrators (TPAs), leveraging paid pilot programs as a key entry point. These pilots, priced at $4,000, ensure serious buy-in from prospective customers and provide an opportunity to demonstrate the platform’s value in real-world operations. Notably, 100% of KnowRisk’s pilot programs have converted into paying customers, underscoring the product’s strong fit with market needs and its compelling value proposition.

The company prioritizes relationship-driven sales, targeting decision-makers at mid-to-large insurance carriers. Participation in industry conferences and events, coupled with executive networking, forms the backbone of their outreach strategy. By building trust and credibility through these channels, KnowRisk accelerates adoption in an industry known for its traditionally long sales cycles.

As the platform gains traction, KnowRisk is scaling its sales efforts to deepen penetration within existing customers while expanding into additional insurance lines. The company’s focus on streamlining the onboarding process and ensuring seamless integration with claims management systems further facilitates rapid deployment and adoption across carrier operations.

By coupling a highly effective pilot-to-customer conversion strategy with a strong presence in industry networks, KnowRisk is well-positioned to scale quickly and establish itself as the market leader in AI-powered claims correspondence automation.

Traction

KnowRisk has demonstrated strong early traction, validating its product-market fit and establishing a foundation for scalable growth. The company has already secured three paying insurance carriers, including the publicly traded Heritage Insurance, along with several third-party administrators (TPAs). Additionally, another carrier has verbally agreed to terms, and there are several active pilot programs with major carriers, all of which are expected to convert into paying customers, continuing their record of 100% pilot-to-customer conversion rate.

From its existing customer base alone, KnowRisk projects $400,000 in annual revenue, with further upside expected as it converts new customers from its growing sales pipeline. This early traction highlights KnowRisk’s ability to drive meaningful results for its customers while positioning itself as a leader in the AI-driven claims correspondence market.

Competitors

KnowRisk operates in a highly fragmented insurtech landscape but stands apart as the first mover in AI-driven claims correspondence automation. While several companies address broader claims management or process automation, none focus specifically on automating claims letters with the accuracy, efficiency, and compliance required in the insurance industry.  

• 3C Deutschland: Specializes in process automation for claims management but focuses primarily on quality management and monitoring rather than automating claims correspondence. Recently acquired by Riverty, their solutions are more aligned with back-office claims processing than front-line adjuster tools.
• Insuresoft: Offers digital insurance platforms covering policy processing, billing, and claims, but lacks the AI-driven automation that KnowRisk delivers. Their technology supports general claims administration, making it complementary but not directly competitive.
• Weav.ai: Provides AI copilots for underwriting and claims, focusing on decision-making and risk assessment rather than automating correspondence. With a smaller team and early-stage funding, they are unlikely to match KnowRisk’s specialized capabilities or market momentum.
• Enlyte Group: A well-funded competitor that focuses on broader claims workflow and performance management. Their solutions target auto and repair industries and do not address KnowRisk’s niche in claims letter automation. 

Competitive Advantage

KnowRisk’s edge lies in its highly specialized AI solution tailored to claims correspondence, a pain point overlooked by competitors. Their platform reduces adjuster workloads while enhancing compliance and accuracy—critical features that large insurtech firms have yet to replicate. Additionally, KnowRisk has deep integration capabilities with existing claims management systems, making its solution seamless to implement and scalable across multiple insurance lines.  

The company’s first-mover advantage in this specific niche positions it to establish itself as the go-to platform for claims correspondence automation before competitors recognize and enter the space. While larger firms may eventually seek to enter this niche, KnowRisk’s early traction, proven technology, and strong customer relationships create a potentially significant moat. By focusing on a single high-value process with no current direct competitors, they aim to establish themselves as the gold standard in AI-driven claims correspondence. Once their customers have been using KnowRisk and trust their tool, the opportunity to expand their product offering to existing customers is extremely compelling.

Market Background

The insurance industry represents one of the largest and most complex markets globally, with significant inefficiencies and operational challenges ripe for disruption. The property and casualty (P&C) insurance sector alone is projected to reach $21 billion in annual software spend in 2025, growing at a 10-12% CAGR, driven by increasing demand for process automation and regulatory compliance solutions. Within this segment, claims correspondence remains a critical bottleneck, consuming excessive time and resources while exposing carriers to litigation risks from errors and missed deadlines.

KnowRisk’s initial focus on P&C claims positions the company in a high-value, underserved niche where no direct competitors currently exist. Beyond P&C, the broader insurance claims processing software spend is expected to grow to $45 billion globally by 2025, with an 8% CAGR. This growth reflects the insurance industry’s increasing reliance on AI and automation to streamline operations, reduce costs, and improve customer satisfaction. KnowRisk’s ability to expand into additional insurance verticals positions it to address a significant portion of this broader market opportunity.

The U.S. market accounts for approximately 38% of global claims software spending, representing a $8 billion SAM for P&C alone and a $17 billion SAM across all claims processing segments. As KnowRisk scales, its potential to expand internationally further amplifies the total addressable market (TAM), creating opportunities to capture substantial market share.

Business Model

KnowRisk operates on a flexible, per-claim pricing model, allowing insurance carriers and third-party administrators (TPAs) to pay based on the number of claims processed. This model offers adjusters unlimited letter generation within each claim, ensuring cost efficiency and scalability for customers while aligning with their operational needs. KnowRisk projects smaller carriers to pay about $250,000 per year for their services, large carriers to pay about $1,000,000 per year, and massive carriers would be negotiated based on volume (multi-million dollar annual contracts). 

• Pricing Structure: Fees range from $10 to $15 per claim, depending on the client’s monthly volume commitment. Larger carriers benefit from reduced costs per claim as their usage scales, creating a mutually beneficial relationship that encourages long-term customer retention.

• Scalability: KnowRisk’s model is inherently scalable, with costs tied directly to claim volumes. As carriers increase their adoption of KnowRisk’s platform across departments or expand usage into additional insurance lines, the company’s revenue grows proportionally.

• Customer Segments: The primary target customers are mid-to-large insurance carriers and TPAs in the property and casualty (P&C) insurance space. These organizations face high claims volumes and significant compliance challenges, making them ideal candidates for KnowRisk’s solution.

• Sales and Onboarding: KnowRisk introduces its platform through pilot programs, charging a $4,000 fee to ensure buy-in and serious intent from potential clients. This approach allows the company to demonstrate value quickly, converting pilot users into long-term customers. The straightforward integration process further reduces friction for adoption.

• Value Proposition: KnowRisk delivers tangible value by reducing claims letter drafting time by over 95%, ensuring compliance, and minimizing litigation risks. Customers see immediate ROI through time and cost savings, as well as improved operational efficiency.

• Future Revenue Streams: As the company expands its product offerings, KnowRisk has the opportunity to unlock additional revenue streams. These products will complement its core offering, deepening relationships with existing customers and attracting new ones.

The Product

KnowRisk’s platform is an AI-driven tool that automates the drafting of claims correspondence. It leverages advanced AI to parse complex policy language, ensure compliance, and generate error-free, legally precise claims letters.

Key Features:

• Policy Parsing: Automatically identifies and applies relevant policy language for each claim.
• Error Reduction: Ensures accuracy and compliance, minimizing litigation risks.
• Seamless Integration: Easily integrates with existing claims management systems, enhancing workflows.
• User-Friendly Interface: Simple and intuitive design for quick adoption by adjusters.
• Scalability: Handles both routine and catastrophe-related claims with ease.

Click Here to Watch a Product Demo

Risks 

• Long Sales Cycles in the Insurance Industry – Insurance carriers and third-party administrators move slowly when adopting new technology, which can delay revenue realization and create cash flow challenges.
• Need to Scale Quickly Before Competition Emerges – While KnowRisk currently has no direct competitors, the use case is clear, and large insurtech firms (less likely) or new startups (more likely) could enter the space.
• Execution Risk in Expanding to Other Insurance Lines – While KnowRisk’s AI is designed for property and casualty (P&C) claims, expansion into auto, liability, and medical insurance will require testing and validation. The ability to replicate success across other insurance verticals is not yet proven.
• Customer Adoption and Retention – While pilot customers have been extremely positive, KnowRisk must ensure long-term customer retention and adoption across entire organizations, particularly as it shifts from pilot programs to full-scale implementations. 

Due Diligence Report

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