Slingshot Insurance has exited stealth mode with $27 million in seed funding to create embedded insurance for inexpensive policies sold during checkout transactions, according to an exclusive announcement to Crunchbase News. Rally Ventures and Skyward Group jointly led the financing round for the AI-powered startup, which links vertical software firms with insurance carriers to distribute small-premium policies at the point of sale. Insurance industry veteran Jim Hays will take a seat on Slingshot's board as the Minneapolis-based company pursues a model that combines technology infrastructure with insurance underwriting.
The six-person startup, which launched operations on July 1 under first-time founder and CEO Ethan Genteman, targets embedded insurance—coverage that buyers purchase alongside another transaction, like registering for youth sports or booking air travel. Slingshot's initial customer and design collaborator, Vertical Insure, already serves more than 750,000 policyholders with an average premium of $25. The startup's debut program is set to launch this month. Rally Ventures co-founded Slingshot as part of a wider approach that has seen the venture firm help start or support roughly eight portfolio companies from stealth. Slingshot currently generates revenue as a technology vendor partnering with external insurance carriers, though Genteman revealed the company is finalizing an acquisition that would allow it to underwrite policies directly.
The financial reality of a $25 insurance policy presents severe challenges, according to Genteman's assessment. A consumer might pay $2,000 for a volleyball league and receive an offer for a $25 policy covering injury or cancellation, yet every policy demands paperwork, insurer coordination, and claims management—costs that rapidly consume the slim revenue from low premiums. Genteman contends that vertical SaaS providers, which offer software customized for particular industries, are seeking revenue sources beyond subscription fees, and embedded insurance delivers incremental income from transactions already occurring on their platforms. A babysitting platform could bundle replacement childcare protection, pet boarding software could include unexpected veterinary expense coverage, and equipment rental systems could add theft or damage safeguards. "The insurance and regulatory landscape is tightly regulated, and most SaaS companies don't have the expertise, industry relationships or understanding of where to begin," Genteman explained. Slingshot addresses this barrier with comprehensive support, transforming a product concept into a fully functioning insurance program. He presented a scenario where a program generating $500,000 in premiums with a 10% margin produces $50,000—"not a viable program for the way incumbent carriers have set themselves up operationally." The platform replaces spreadsheets and fragmented systems with software that directly connects distributors and insurance providers, using AI to automate data-intensive processes while maintaining decision records for audit purposes. Slingshot collects a 5% technology fee for its services.
The company emerged from operational difficulties faced by its first customer. Rally had previously helped establish Vertical Insure, which distributes insurance through software platforms, but the business encountered obstacles when seeking carriers whose technology could support new product introductions. "We can design the products our customers need almost overnight, but the industry is tightly regulated, and we need delegated authority just to write and distribute what we've built," noted Brock Noland, co-founder and CEO of Vertical Insure, who also serves as a Slingshot co-founder. Even after locating a cooperative insurer, system integration generated additional delays due to antiquated carrier approval processes. Before founding Slingshot, Genteman held the position of chief actuarial officer at Palomar Holdings starting in 2019, where he constructed the firm's actuarial and data operations as it diversified beyond earthquake coverage. Roughly a year ago, he began developing prototypes in his basement, initiated conversations with Rally near the close of 2025, and departed Palomar on July 1 to lead Slingshot. Justin Kaufenberg, managing director at Rally Ventures and former SportsEngine leader, observed that embedded insurance became a significant revenue stream in his prior company. Rally co-founded Slingshot to unify insurance backing, underwriting, reporting, claims administration, and distribution within a single operation. "To get the carrier, the reinsurance, the underwriting platform, the data flow engine, the reporting capabilities, the claims handling, the embedded distribution engine, and every other part of the offering from a single vendor is unheard of," Kaufenberg stated. The pending carrier acquisition would position Slingshot to deliver both the technological infrastructure and the financial capital required to write policies, eliminating the fragmentation that currently prevents insurers from profitably serving the micro-premium market vertical SaaS companies want to access. The consolidation of technology and underwriting authority could determine whether embedded insurance becomes a mainstream revenue channel for industry-specific software or remains confined to higher-premium products where traditional carrier economics still function.