Hartford Business Journal

28 HARTFORDBUSINESS.COM | April 11, 2022 TECH 25 Covr Financial Technologies CEO Mike Kalen in his company's downtown Hartford office in the Boat Building. Rocky Hill-based Direct Color Systems manufactures and sells commercial and industrial inkjet printers. With $15M in fresh capital, Covr eyes next growth phase By Norman Bell Hartford Business Journal Contributor W ith a fresh $15 million in Series B capital in hand, Covr Financial Technologies is ready to push the pace in growing its business-to- business insurtech business. CEO Mike Kalen says Covr's software provides a centralized portal for its asset management and wealth advisor clients to compare the benefits of certain name-brand insurance products and find the most affordable coverage for their customers. Its applications are aimed at simplifying how people buy insurance by standardizing the way insurance products are quoted. He rattles off insurance giants like MassMutual, Nationwide, AIG and Pacific Life among the 38 brands Covr makes available within its white label product line. He estimates 70% of Covr's business is in life insurance with another 20% in long-term care insurance and 10% in disability and other supplemental coverage. Kalen's background includes stints as president of The Hartford's individual life insurance unit and Hartford Life Europe. He joined Covr in 2018. Today, Covr has its software as a service suite deployed with more than 30,000 financial advisors and 35 financial institutions. Its next target market for growth is independent insurance agents, Kalen says. The firm's roots are in Boise, Idaho, where National Brokerage leveraged deep local tech know- how to start working on insurance challenges. Seven years ago, Kalen explains, an infusion of venture funding allowed National to open Covr in Hartford to tap into the burgeoning insurtech ecosystem. A Series A round in 2020 raised $7.5 million from the likes of Fairview Capital, Aflac Ventures and Connecticut Innovations. Covr reported a 250% sales bump from 2019 to 2020. The insurance talent available in Hartford fits perfectly with the company's needs as it grows, Kalen says. Today, Covr has 115 employees, split about evenly among Hartford, Boise and remote offices. Kalen points to seven hires that are the direct result of networking in Hartford. He also sees UConn as a strong trainer of young talent. Covr took the leap to bring employees back to its offices on Hartford's Constitution Plaza in September. It's not full time and there are exemptions for those who are at risk or apprehensive, Kalen explains. Many told Kalen "I didn't realize how much I missed it," he recalls. He sees this hybrid approach as the new normal. These are important times in insurtech as competitors emerge from pandemic restrictions that both heightened the demand for insurance and highlighted the advantages of a digital approach. Many — like Covr — have thrived but a consolidation phase is right around the corner for the industry, Kalen warns. He points to insurer Travelers Cos.' recent purchase of Trov, a San Francisco Bay area insurtech that has created a direct- to-consumer mobile insurance platform, allowing for on-demand insurance purchases. He expects to see private equity firms buying and merging insurtechs to achieve scale. "You have to grow to control your own destiny," he says. And growth is exactly what's on his agenda for Covr as it adds the new funding to its toolbox. Overcoming pandemic slowdown, Direct Color Systems regains momentum in niche commercial inkjet printing market By Norman Bell Hartford Business Journal Contributor W hen Tom Kaplinski took over as CEO of Direct Color Systems, the road ahead looked smoother than I-91. Founders Bill and Blair Allen had built a powerhouse in the growing niche market of commercial and industrial inkjet printing equipment. In fact, business was going so well that the Allens decided they needed to bring in Kaplinski's experience in developing enterprise-grade processes. That was January 2020. The honeymoon was brief — about five weeks, as Kaplinski tells it. That's when the COVID pandemic hit and Direct Color's world stopped spinning. Trade shows ceased; so did orders. As the money flow slowed, Kaplinski found himself preparing for a shutdown. All 50 employees were put on hourly status. "It's the first time I'd been an hourly employee since bagging groceries as a kid," Kaplinski recalls. A loan of a little less than $1 million from the federal Paycheck Protection Program stabilized the situation and allowed Direct Color to make payroll and keep everyone on benefits. Since that low point, business has been coming back, both here and in Direct Color's international headquarters in Portugal. International revenues amount to about 10% of the firm's sales. Trade shows are moving from the virtual world back toward personal contact. New ideas never stopped and Direct Color rolled out the wide format UV84-DTS printer last fall and has new products in the pipeline. Direct Color's forte is the ability of its product line to print on a wide variety of materials and in a wide variety of shapes. Want your logo on a coffee cup, golf ball or even a fishing lure? Direct Color has the tools. Want to wrap a car or building? Direct Color has the tool. How about printing signs in Braille to comply with Americans with Disabilities Act regulations? Not only does Direct Color have the tool, it holds three patents on that technology. The printing units aren't cheap, running from a bit over $30,000 to about $100,000, Kaplinski explains. "We haven't cornered the market," he says, but the firm is on a "happy trajectory" in a printer market that's growing about 3% a year. He's delighted with the support he's received from the Connecticut business community. Connecticut Innovations was an early investor. So were some small local investors. He counts 46 Connecticut suppliers in his supply chain and uses local accountants and lawyers. He points to the teamwork during the darkest days of 2020 as having been helpful. Businesses were all in the same situation, he recalls. Nobody had cash but "there were things we could do for each other," he said, "and we did." Somewhere downstream, he says he can envision teaching business students about the lessons of 2020. But for now, it's full speed ahead. The in-house design team is working on new products and the Rocky Hill plant can handle the manufacturing volume. Now if Kaplinski can iron out a few international supply chain hiccups, the road ahead will again resemble I-91. At A Glance Company: Covr Financial Technologies | Industry: Insurtech Top Executive: Mike Kalen, CEO | HQ: Hartford Company Website: covrtech.com At A Glance Company: Direct Color Systems | Industry: Manufacturing Top Executive: Tom Kaplinski, CEO | HQ: Rocky Hill Company Website: DirectColorSystems.com | Phone Number: 860-829-2244 HBJ FILE PHOTO PHOTO | CONTRIBUTED Tom Kaplinski

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