District Cover, a tech-enabled commercial insurance agency, has raised $6 million in funding, the company tells This Week in Fintech exclusively.

Founded in 2022, Nashville, Tenn.-based District Cover says it aims to improve insurance access and literacy for small businesses located in urban cores, particularly those in high-crime and economically distressed areas, using granular data analytics and a “flexible” underwriting model.

IA Capital led District Cover’s fundraise, which also included participation from existing backers Mosaic and Impact America Fund. Previous investors Andreessen Horowitz (a16z), Amwins, Liquid2 and Vantage Risk also wrote checks into the round as well. 

With this financing, District Cover has now raised a total of $13.35 million. Its valuation has nearly doubled from July 2024 when it raised $7 million in a seed round of funding, going from $14.25 million post-money to $26 million post-money, according to Patrick Girouard, founder and CEO of District Cover.

“Our mission is to ensure that every business, especially those in overlooked city neighborhoods, has access to the coverage they need to thrive,” he said.

District Cover operates under the premise that businesses located in urban areas, especially those where there is a lot of crime, are often challenged when it comes to getting affordable insurance.

“The industry at large uses fairly broad underwriting instruments to make risk-based judgments, and when you do that, you leave a lot of areas and businesses and individuals behind,” Girouard told This Week in Fintech. 

To be clear, District Cover itself is not an insurance company. As an MGA (managing general agent), it doesn’t take the risk of insuring a business onto its own balance sheet and pay out claims. Rather, it partners with insurance carriers and gets a fee from the carrier. Its revenue model is fee-based and is tied to the amount of premium flowing through its platform, meaning that it gets a percentage of “everything” that it is procuring for the carrier.

“So we solicit the business, we underwrite it, we price it, we issue it through our technology stack, and then monthly, we say to them, ‘here’s what we wrote and we’re going to deduct our fee,’ ” Girouard explains.

The founder claims that District Cover is more fair to businesses when pricing policies, taking a more nuanced approach.

“Generally speaking, the industry has used models built for real estate and other industries to assess crime, but these models fall short from an insurance perspective,” he said. “They lack location granularity, are missing nuance around business type, and have proven less relevant for predicting insurance loss. Often, insurers look back over a five to ten-year period to make decisions versus what is happening in real life.”

The company expects its gross ARR for 2025 to be around $5 million, and that it will be profitable by 2027. To date, it has received over 10,000 insurance applications. Presently, it has 20 employees.

Matt Perlman, partner at IA Capital, told This Week in Fintech via email that his firm was impressed with District Cover’s ability to have built out a “robust network” of distribution relationships and “demonstrate credibility” with providers, as well as its “differentiated approach” to data analytics and risk selection.

He added: “We think District Cover is differentiated in…its innovative use of data to underwrite dislocated pockets of commercial insurance risk that are underserved by traditional, primarily admitted players."