Siraban Financial Case Analysis
Autor: americanmaratha • March 18, 2018 • Case Study • 2,106 Words (9 Pages) • 553 Views
Siraban Financial Case Analysis
By Swapnil (Neil) Jadhav
Overview: Siraban financial, a company with a vision to create an online marketplace for purchasing annuities is struggling to find its success with its customers. The Siraban CEO Matt Caper has experience of working at U.S. Treasury, CTO Adair with experience working at Paypal and Blackrock, and COO Nimish Sood with a strong financial services background. With this relevant experience, a convincing business plan, and strong educational background (UPenn) the team has secured financing from a venture capital firm. However, two months after the website launch the company hasn’t found a single customer and hasn’t generated any revenue. Investors are getting worried about this and the team clearly requires a rework of their marketing strategy for a successful future.
Situational Analysis:
Annuities are financial products that offer a guaranteed lifetime income in exchange of retirement savings. These are typically useful to those who think that they will outlive their savings and Annuities are traditionally sold by insurance companies through an agent. There are about 14 major insurers in U.S. who sell a variety of products, and about 20 other companies who sell annuities, but offer limited annuity products. None of these companies sell their product online and with about 10,000 Baby Boomers retiring a day, this is a huge opportunity to change the way people purchased annuities with only a few companies offering it online.
Company:
Siraban not only wanted to offer buying annuities online but also wanted to remove the confusion a buyer has around multiple options and complexities around it. The team partnered with major insurance agencies and was successful in getting 7 of the 14 of them on their website. Company received $470,000 in Angel funding in early 2014 and launched a beta-site in late 2014 with an official launch in January 2015. The site was extremely easy to use to address a concern that 80% of working adults (LIMRA research) felt around a distrust when interacting with insurance companies. The customer answered some basic demographic information and the required savings or money they would like in retirement to get a list of all possible insurance products that would satisfy their needs. For the partner products Siraban receives a commission from 3% (Principal Financial Group) to 7.5% (Americo) for a sale. For other non-partnered products Siraban offers information on how to buy those products to keep the process transparent.
The company’s economic status is as below.
Expense Details/Month | Expense Amount/Month |
Website Maintenance | $1,000.00 |
Office Rent (shared space) | $2,000.00 |
Salary (3 Team members) | $15,000.00 |
Research | $2,000.00 |
Burn rate/month | $20,000.00 |
Total balance | $320,000.00 |
Months before running out of cash (Angel Funding) | 16 months |
Customers:
Most of the B2C customers for Siraban are one time purchasers that have between $250k to $5 million in savings. The average amount of savings of the purchasers is around $500k, purchased by customers that are in average or above average health. The average size of annuity purchase over the last five years was $50k, purchased by already retired customers of age around 67. Typically, these customers did not shop around but went through an agent, who also sold them other policies. Other customers are anywhere between 45-67, income of $75k and above, and savings of $250k or above.
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