Growing Tech-based Start-ups: Why they need to be secured.
India is a country with over 600 million internet users, a potential ecosystem backed by numerous opportunities that are defining the boom in the tech-based Indian startup culture. In India, tech-based startups have created a revolution, providing unprecedented efficiency through newer methods. Currently, India boasts more than 55,000 startups, 35 of them unicorns, making India the second largest startup ecosystem in the world. The business model heavily relies on third-party funding’s, data, and sophisticated delivery modes. And these bring in numerous threats ranging from legal, cyber, or operational, which if not taken care of can negatively impact the startups.
Why do startups demand investment in security?
Most Indian startups are still in the growth phase. Since this is a time when the management solely focuses on strategy and operations, they actively need consultants that point out potential risks. Mitigating the risk exposure requires careful investment in innovative insurance policies designed to cater to the startup’s specific needs.
For a tech-based startup, insurance policies are needed as they can provide covers for the following factors:
Directors and officers of startups are often exposed to claims such as frauds, wrongful acts, mismanagement, theft, etc. from the investors, clients, employees, or competitors. Such claims can result in the startup losing goodwill, customers, vendors, and eventually revenue.
Claim against the Company and Employees:
The company, along with its employees, are directly exposed to the claims made by the clients for inadvertent mistakes or unsatisfactory work. As professional errors can result in financial losses for the client, the startup or its employees can be sued to recover the losses incurred.
While startups attract a young workforce leveraging flexible work culture and employee-centric policies, the pressure, work conditions and demands often lead to negative eventualities - both in professional and personal lives. Believing employees to be their most crucial resource, securing their physical and mental health becomes vital to the success of startups.
Tech-based startups majorly depend on data and advanced technologies to build their brand and succeed. However, dependency on technology can result in financial losses due to cybercrimes such as data breaches and system hacks. Not only it can bring on third party compensation suits but also harm the revenue and goodwill of the startup.
Insurance products for tech-based startups
There are specialized insurance policies to cover various aspects of a startup’s lifespan. Some of the most sought-after insurance products for tech-based startups include:
Directors and Officers Insurance (D&O):
Any type of startup with a board of directors and officers holds the risk of being sued by employees or a third party. A Directors and Officers Insurance provide protection for the directors and the officers against such third-party liabilities. It can also be an important factor in securing funding as the policy also covers investors and venture capitalists.
Errors and Omission Insurance:
E&O insurance, also known as Professional Liability Insurance, protects the company and its employees against claims from clients pertaining to unsatisfactory and unprofessional work. The insurance policy provides coverage for any unintended errors or omissions on the part of the company and its employees.
Group Employee Insurance Plans:
To protect the employees is to protect the startup. Comprehensive Group Employee Insurance Plans allow the startup to offer customized benefits such as mental-wellbeing, dental care, workplace protection, fitness, and nutrition guidance.
Cyber Security Insurance:
Cyber Security Insurance is a type of innovative insurance policy that provides protection against financial losses incurred by a startup due to data breaches and other cyber-related incidents. A comprehensive Cyber Security Insurance would cover costs incurred on retrieving the data or pay compensation to a third party.
As India grows its startup culture through data-driven innovative technologies, more factors hampering startups’ lifespan pop up. Amid increased competition and a dynamic environment, startups are finding it critical to have comprehensive protection in place through specialized insurance plans targeted towards startup life.
However, analyzing various aspects of the startup and buying ideal insurance products can be tricky. PINC Insurance is a network-oriented insurance broker that has established itself as a one-stop solution for every startup’s insurance needs. You can visit us at PINC Insurance to secure your startup in the most effective and ideal way.