#147: How a Philadelphia Insurance Agent Built the Uber of Surety Bonds - Aaron Steffey

Aaron Steffey is the co-founder and co-CEO of Propeller, an online platform that enables insurance agents and brokers to issue surety bonds instantly — without the lengthy paperwork or back-and-forth typically involved in bonding. Aaron was an insurance agent, and his co-founder cousin, Chris, was a surety bond underwriter before 2019, when they set out to revolutionize the way surety bonds are bought and sold.

They initially bootstrapped with a software development partner who accepted equity instead of fees. Their first version drastically simplified the process of buying and selling surety bonds in the digital world, allowing them to grow quickly. They raised $7 million in SAFE notes from strategic partners to accelerate growth in 2021 and grow to nearly $20 million in revenue. They sold 100% of the company to Arch Capital in a strategic acquisition in early 2024.

In this episode, Aaron also talks about:

• How this sleepy, paper-based market changed quickly in COVID
• Why they raised growth funding from strategic investors and not VCs
• Why they sold the company and are still leading the business after the sale

Quote from Aaron Steffey, co-founder and co-CEO of Propeller

“My biggest advice for startup founders is simply just that endurance wins. It’s the whole thing of getting back up after you're knocked down, like everyone says. I had to live that so many times. So many No's when it came to our first carrier pulling out. No, I don't want to invest. No, I don't want to use your surety product. 

“There were so many times when I wanted to give up. And the same with my cousin. Had we not founded the company together, I don't know that we would have continued because there were probably times when I would have given up.  

“As long as both of us weren't on the floor, one of us would just pick the other up when the other person usually was more sane, and we dragged each other along. 

“A successful founder needs to have a pretty high pain tolerance and endurance to succeed. You just have to keep pushing forward. It just sounds so cliche, but that’s what it was for us.”

Links

• Aaron Steffey on LinkedIn
• Propeller on LinkedIn
• Propeller website
• Arch Capital website

The Practical Founders Podcast

Tune into the Practical Founders Podcast for weekly in-depth interviews with founders who have built valuable software companies without big funding. Subscribe to the Practical Founders Podcast using your favorite podcast app or view on our YouTube channel.

Get the weekly Practical Founders newsletter and podcast updates at .css-j9qmi7{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:row;-ms-flex-direction:row;flex-direction:row;font-weight:700;margin-bottom:1rem;margin-top:2.8rem;width:100%;-webkit-box-pack:start;-ms-flex-pack:start;-webkit-justify-content:start;justify-content:start;padding-left:5rem;}@media only screen and (max-width: 599px){.css-j9qmi7{padding-left:0;-webkit-box-pack:center;-ms-flex-pack:center;-webkit-justify-content:center;justify-content:center;}}.css-j9qmi7 svg{fill:#27292D;}.css-j9qmi7 .eagfbvw0{-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;color:#27292D;}