Mirroring client operations with Archipelago
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What
Archipelago is a machine learning-powered risk data platform. Its clients are large owners of commercial property who, due to their need for commercial property insurance, use Archipelago to improve their management of insurable exposures and improve their risk-management processes and insurance outcomes. Founded in 2018, Archipelago most recently raised $34 million in an oversubscribed Series B round, with funding from Scale Venture Partners, Canaan Partners, Ignition Partners, Zigg Capital, Stone Point Capital Partners, and Prologis Ventures.
Why
According to Hemant Shah, Archipelago’s CEO and Co-Founder, the need for commercial property risk-management solutions is threefold. First is the consolidation of property by large property-management and real-estate firms, meaning large corporations’ risk-management decisions can have outsized effects on the property space. Second is the year-on-year increase in insurance premiums.
And lastly, if not most importantly, is the growing risk posed by climate change, which increases the probability of property damage and loss. “Those three trends are leading some of the largest traditional buyers of commercial property in the world to start to rethink their strategies of risk management and resiliency, and look to get more data-driven themselves in how they approach the options to manage, mitigate, and transfer the risk of their assets,” Shah said.
How
Archipelago has consciously approached the largest and most reputable property-management enterprises, looking to build out a risk-management market from the buy side. Logistics real-estate giant Prologis, for example, is on Archipelago’s platform; ensuring that Archipelago is a success for Prologis involves “speaking their language,” and, by extension, operating in a way that mirrors the client’s needs and structure.
To Shah, Archipelago is filled with tech and data-science talent, but it also boasts engineering and property management talent. Its operations require facilities engineers, insurance underwriters, and other property-facing experts in order to successfully build out the products and support that will be of use to clients.
“These are complex, large companies, not digital abstractions,” Shah said. “They’re building a million-square-foot distribution center, or a vast data center, or an industrial campus—and so you have to have an affinity and that's built into your investment model.”
Avoiding what Shah calls a “technical monoculture” involves more than just hiring different kinds of engineers or experts. Archipelago has been a geographically distributed organization since its founding. “We can hire and operate where the talent is and where the stakeholders are,” Shah concluded.
