#123: The First Major Vertical AI Exit, Powering GTM Teams With Good Data, Check Cashing As A Wedge
One vSaaS breakdown. One biz story. One 'how to'. In your inbox once a week.
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One Biz Story:
EvolutionIQ & The First Major Vertical AI Exit
Very few folks have heard of EvolutionIQ, but it is an INCREDIBLE vertical AI company that redefined insurance claims processing and achieved one of the first major vertical AI exits with a $730 million acquisition by CCC Intelligent Solutions in December 2024.
We are BEYOND STOKED to have the Co-CEO’s at the Vertical Software Summit in October 2024. So come hear them tell the real story and grab your tickets here (BTW — they are going way faster than anticipated so don’t wait much longer).
Let’s dive in…
EvolutionIQ, founded in 2019, is the market-leading AI-powered Claims Guidance platform, specializing in disability, workers’ compensation, and property & casualty insurance. Its core mission is to empower claims professionals with AI-driven insights to make smarter, faster decisions, ultimately helping injured individuals return to work sooner while reducing costs for insurers. The platform leverages AI to transform messy, unstructured data—such as medical records—into clear, actionable “Next Best Actions” for claims adjusters. This results in improved claimant outcomes, lower claim costs, and enhanced operational efficiency for carriers.
The company’s value proposition is twofold: it enhances the claimant experience by accelerating recovery and return-to-work timelines, and it delivers significant ROI for insurers by reducing loss ratios (up to 3.3%) and claim durations (up to 45% in some cases). EvolutionIQ’s “explainable AI” ensures transparency, fostering trust among claims professionals who rely on its guidance to prioritize high-impact cases. By focusing on a niche but critical vertical—insurance claims—EvolutionIQ carved out a defensible market position.
The Founders:
Michael Saltzman (Co-Founder & Co-CEO): Saltzman’s background in insurance and operations provided the domain expertise needed to navigate the complex world of claims processing. His focus on building relationships across organizational hierarchies and hiring experienced sellers who “sound like natives” helped EvolutionIQ gain credibility in a skeptical, slow-moving industry
Jonathan Lewin (Co-Founder & Co-CEO): Lewin’s strategic insights and customer-centric approach complemented the technical and operational strengths of his co-founders. He emphasized the underserved nature of the disability insurance market, recognizing its massive revenue potential despite its esoteric reputation. Lewin’s leadership helped EvolutionIQ stay focused on delivering compassionate, impactful solutions.
Tomas Vykruta (Co-Founder & President): A former Artificial Intelligence Technical Leader at Google, Vykruta brought deep expertise in machine learning and data science to EvolutionIQ. His experience at Google instilled a metrics-driven approach, evident in the company’s early adoption of Google’s OKR system. Vykruta’s technical prowess and strategic vision were instrumental in shaping EvolutionIQ’s AI-native platform.
Market Size:
The U.S. disability insurance industry alone generates tens of billions of dollars in revenue annually, with insurance claims accounting for trillions in payouts each year. The broader property and casualty (P&C) insurance market, which includes workers’ compensation and auto casualty, is even larger, with tens of billions in injury claims processed yearly.
In the U.S., there are approximately 1,100 property and casualty insurers, including major carriers, managing general agents (MGAs), and third-party administrators (TPAs). Additionally, there are thousands of smaller businesses, such as self-insured employers and claims management firms, that could benefit from EvolutionIQ’s solutions.
First Customer:
EvolutionIQ’s first customer was Principal Financial Group, a major insurance company that later became an investor in the company’s Series B round. Principal’s early adoption validated EvolutionIQ’s technology, with claims leadership expressing excitement over initial results. The partnership deepened over time, with Principal expanding its use of EvolutionIQ’s platform across its claims operations. This early win was pivotal, as it demonstrated the platform’s ability to deliver measurable impact in a real-world setting, paving the way for broader market traction.
Product Suite:
EvolutionIQ’s product suite is designed to streamline claims processing and enhance decision-making through AI-driven guidance. Key offerings include:
Claims Guidance Platform: The core product uses proprietary machine learning and natural language processing to monitor open claims in real time, prioritizing those requiring attention or complex decision-making. It provides clear, actionable recommendations to claims adjusters, reducing manual effort and improving outcomes.
MedHub: An active medical summarization tool that transforms unstructured medical data into concise, actionable insights. MedHub supports life, health, accident, and casualty lines, enabling adjusters to quickly understand a claimant’s medical history and needs.
Specialist Intervention Optimization: A module tailored for workers’ compensation claims, this tool identifies opportunities for specialist interventions to improve worker outcomes and reduce claim durations.
Integration with Guidewire: A cloud-native integration with Guidewire Software enhances compatibility with existing insurer workflows, ensuring seamless adoption.
These products are built to be AI-native, requiring minimal IT resources and delivering insights within two weeks of implementation. They adhere to strict security standards and recalibrate daily based on new data, ensuring real-time accuracy.
Product Costs:
Exact pricing for EvolutionIQ’s products is not publicly disclosed, as costs vary based on the size of the insurer, the number of claims processed, and the specific modules deployed. However, vertical AI solutions in the insurance industry typically follow a subscription-based SaaS model, with annual contract values (ACVs) ranging from tens of thousands to millions of dollars for large carriers. Given EvolutionIQ’s reported revenue of $45–50 million projected for 2025, and assuming a customer base of dozens of major insurers, the average ACV likely falls in the $500,000 to $2 million range for enterprise clients.
Customer Acquisition Motion:
Elite Sales Team: For these types of Contract sizes, it makes sense that the company avoids hiring junior sales development representatives (SDRs) or business development representatives (BDRs), instead recruiting experienced sellers who understand the nuances of insurance claims. These “natives” build credibility by speaking the industry’s language and addressing organizational pain points.
Pilot-to-Production Model: EvolutionIQ’s sales process often begins with a pilot, allowing carriers to test the platform’s impact on a subset of claims. The company boasts a 100% conversion rate from pilots to production customers, driven by measurable ROI, such as reduced loss ratios and faster claim resolutions.
Strategic Partnerships: Collaborations with industry leaders like Guidewire and endorsements from early customers like Principal Financial Group enhanced EvolutionIQ’s market credibility and reach.
Current Customer Base
As of 2023, EvolutionIQ had been adopted by 70% of the top 15 U.S. disability carriers and a growing number of workers’ compensation carriers. While exact customer numbers are not disclosed, the company’s rapid growth—tripling contracted revenue in 2022—suggests a customer base of dozens of major insurers, including household names like Principal Financial Group, Lincoln Financial Group, and HEMIC. The platform’s global reach, with clients in the U.S., Europe, and Australia, further expands its footprint. Given its focus on enterprise clients, EvolutionIQ likely serves 50–100 carriers and administrators, with potential for significant growth as it scales under CCC
Revenue Figures:
EvolutionIQ’s revenue growth has been remarkable, reflecting its strong product-market fit. According to posts on X, the company is expected to generate $45–50 million in revenue in 2025, with gross margins exceeding 75%. This follows a trajectory of tripling contracted revenue for three consecutive years, with 2022 marking a particularly strong year of customer expansion and module adoption. While earlier revenue figures are not publicly available, the company’s $200 million valuation in 2023 and projected 2025 revenue suggest annual recurring revenue (ARR) in the $30–40 million range by 2024.
Fundraising:
EvolutionIQ raised a total of $58.5 million across four funding rounds, attracting top-tier investors and strategic partners:
Seed Round (2019): Led by First Round Capital, with participation from FirstMark Capital and Foundation Capital. The amount was not disclosed but likely in the $5–10 million range, given typical seed rounds for AI startups. Bill Trenchard of First Round played a key role in supporting the company’s early vision.
Series A (April 12, 2022): $21 million led by Brewer Lane Ventures, with participation from First Round Capital, FirstMark Capital, Foundation Capital, Altai Ventures, Asymmetric Capital Partners, and strategic investors like Reliance Standard Life, New York Life Ventures, Guardian Life, and Sedgwick. The round valued EvolutionIQ at approximately $150 million.
Series B (February 28, 2023): $7 million led by Brewer Lane Ventures, with participation from First Round Capital, FirstMark Capital, Foundation Capital, and Principal Financial Group. The round pushed EvolutionIQ’s valuation past $200 million.
Additional Round (Undisclosed): Tracxn reports a total of $58.5 million raised, suggesting an additional round or bridge financing, though details are sparse.
The Exit: A $730M Acquisition by CCC Intelligent Solutions
In December 2024, CCC Intelligent Solutions, a leading cloud platform provider for the P&C insurance economy, acquired EvolutionIQ for $730 million, marking one of the first major vertical AI exits. The deal was a strategic move to expand CCC’s market reach into disability and injury claims management, complementing its existing auto casualty product suite. EvolutionIQ’s proven AI capabilities, including its “Next Best Action” guidance and medical summarization, were seen as a transformative addition to CCC’s platform, which processes tens of billions in injury claims annually.
The $730 million price tag, at a projected $45–50 million in 2025 revenue, puts the acquisition multiple (approximately 15x forward revenue) underscores the premium placed on vertical AI leaders with proven ROI.
To wrap it all up…
EvolutionIQ’s journey from early vertical AI startup to the first signficiant vertical AI exit is absolutely incredible. As one of the first major vertical AI exits, EvolutionIQ’s story offers valuable lessons for founders: narrow focus, deep domain expertise, and relentless execution can yield outsized outcomes, even in seemingly esoteric markets.
One ‘How-To’:
Powering GTM Teams With Good Data
One of the things founders/operators don’t spend a ton of time talking about outside of the organization, is data, specifically data that powers our GTM teams.
This was a HUGE topic at my last business. We were selling into Trade Schools, and it was incredibly difficult to find high quality customer data for our sales folks to call on.
I think a lot of vSaaS companies serving niche industries face similar challenges. So I wanted to focus on it today...
The strongest Vertical SaaS companies generally view having good data as a competitive advantage.
If you’re killing the data game, your company will:
TAM: Maintain a quality database of 80 - 90% of their TAM accounts
Enrich with ICP Attributes: Label these businesses attributes that indicate size and fit of each account (often vertical-specific data points)
Prioritize / Segment: Be able to run deep filters like which other systems are they using, which segment within your vertical, etc.
Having most of your TAM in your CRM lets you be strategic about prioritization, territory planning, rep hiring, and marketing audiences.
As a vertical SaaS, I’d say your ENTIRE TAM should be in your CRM. That’s the north star.
So how do you get your entire TAM into a system?
There are a mix of strategies across looking at licenses/permits, data sources like Google Maps & Yelp, and looking at vertical-specific databases. Newer vertical saas GTM tools like Orbital also can help with this.
Enrich with ICP Attributes
You probably have seen that there are very good prospects and very bad prospects even within your TAM.
You may only be able to work with prospects who are a specific size, who use a specific platform you integrate with, or who have a very specific characteristic that makes your product 10x more valuable.
You can have your BDRs enrich these data points, hire a data labeling team on Upwork, or use an AI tool like Orbital.
Score & Segment
Now the fun part—look at closed won & lost to build a score or tiering model. Don’t over-engineer it, you can just break customers into 3 - 5 buckets ranging from “do everything possible to get this prospect” to “don’t reach out to this customer for 24+ months.”
Then you can segment your most relevant accounts into different campaigns—the companies using a specific competitor get a different message than companies using pen & paper, for example.
Final Thoughts
You can have the best product and sales reps in the world, but if you have bad data you WIL be leaving a lot of money on the table with your GTM motion. Historically, the best Vertical SaaS companies had to dedicate full-time engineers / data scientists and employ a data labeling team.
Which is why I’m pretty excited about companies like Orbital who are offering this in a platform rather than needing to build in-house. Spend reps on this. You will start hearing about it in every management meeting from your team :-).
One vSaaS Breakdown:
Check Cashing As A Wedge
There is one play I haven’t seen really anyone take advantage of. I think it’d work too so wanted to share it with our community and get your feedback.
CHECK CASHING.
At my last SaaS business NEARLY EVERYONE paid for our software with checks. You’d think that’s absolutely crazy seeing that it’s 2025, but it was the reality.
I’ve asked multiple founders if this was the case in their industries and 40%< told me that this was the indeed the situation for the industry they served.
I’m not kidding you when I say this…
For our first ~5 years I would get the checks in the mail and manually upload them to our bank account. When our bank finally flagged it to me, they sent me a fancy hardware machine that could upload a significant number of checks all at once. Was awesome - really helpful.
But if you put yourselves in your customers shoes, it’s not good enough to upload the checks into the bank account. When I spoke to admins at Trade Schools they explained how they would then manually have to update the record for EVERY INDIVIDUAL / COMPANY that paid into their management system.
This is a really strong, simple, wedge opportunity.
It’s an area where you can prove value relatively quickly and pretty easily.
How? Build a tool that enables a seamless and easy experience to automatically upload all the checks into their bank accounts AND the ERP/Management System within a particular vertical with <5 clicks. With AI there is likely a really easy / clean way to do this effectively.
This is a great wedge because it’s a no brainer, it’s very low-friction, it’s an immediate value driver, and it can get you into the back-office at hundreds or thousands of companies in your vertical.
Guess what you can do next?
You can add more-and-more back-office products:
Industry-Specific A/R and A/P
Industry-Specific Expense Management & Corporate Cards
Industry-Specific Payroll
Industry-Specific Performance Reviews
And just keep eating more and more of the back-office…
Too many folks go front-office in vertical software, when nearly every industry is running on the same crappy back-office tools and shoe horning them in to make them work for their sector. And very few of them are integrated with the industry-specific management/ERP systems.
Big opportunity here in probably 100< industries.
If you’re running this play or something like it, let me know. I’d love to support you in any way possible!
Have a product or service that would be great for our audience of vertical SaaS founders/operators/investors? Reply to this email or shoot us a note at ls@lukesophinos.com