Tech startup of the month.INITIAL LIGHTBULB: About 20 years before taking higher math to the insurance industry with Valen, Dax Craig and Richard Vlasimsky met as junior high school students in Tulsa, Okla. In 1993, Craig moved to Boulder to pursue an MBA MBA
Master of Business Administration
Noun 1. MBA - a master's degree in business
Master in Business, Master in Business Administration . One of his school projects turned into a successful antenna company, Xertex Technologies, which he sold to market leader Centurion Wireless Technologies in 2000.
Meanwhile, Vlasimsky was working in software, as a consultant for Accenture and as a developer and product manager for other companies. After Craig fulfilled his commitment to Centurion in early 2002, he "wanted to get back into entrepreneurship," and gave old friend Vlasimsky a call. The pair had talked about starting a company together for a decade, and the time for a new venture--Valen--was right for both of them.
For CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Craig, his involvement with Valen arose more from "opportunity than experience," while CTO (Chief Technical Officer) The executive responsible for the technical direction of an organization. See CIO and salary survey. Vlasimsky's know-how with artificial intelligence and data mining provided the basis for the company's technology.
IN A NUTSHELL: Valen's engineering team developed software to help companies make core business decisions, with the initial market being the insurance industry. The company's first product, Risk Manager, runs on an algorithm-based platform called Decision Studio (which will also underpin future Valen products for other industries).
"These algorithms are based on a branch of statistics known as statistical learning theory Statistical learning theory is an ambiguous term.
"Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. the answer. You fit an outcome to a model, rather than a model to an outcome."
An example as it pertains to Risk Manager: "An insurance company is guessing about risk when they underwrite a new client," said Craig. "(Underwriters) tend to focus on one or two variables. We actually take the entire set of potential risk characteristics--100, 200, 500 characteristics--and give the underwriter complete and total recall of that company's entire history across hundreds of thousands, even millions, of policies."
Using historical data from real underwriting departments, Valen's proof-of-concept tests yielded improvements in loss ratio (the ratio between losses and premiums) of 1.5 percent to 8.9 percent when using Risk Manager to recommend which policies to underwrite. A strong underwriting bottom line has become increasingly important for insurers, because "what's happened in the financial markets over the past couple of years has really put a re-emphasis on underwriting," Craig noted.
The pricing model for Risk Manager is performance-based. "We try to set up pricing mechanisms with our clients where our interests are aligned," said Craig. "We make money when they make money, and when they lose money, we don't make as much money."
THE MARKET: The $1 trillion U.S. insurance industry spent almost $20 billion on IT in 2002, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. International Data Corp. While insurance is Valen's current target vertical, the company plans to move into other markets in 2004 and beyond, including financial services (especially for the loan-approval process), logistics and quality control. The insurance industry came first because "the competitive landscape was nonexistent non·ex·is·tence
1. The condition of not existing.
2. Something that does not exist.
non and the need was dramatic," said Craig.
FINANCING: The 12-employee Valen closed on a Series A round of funding in September 2003. The lead investor was Cherry Creek Venture Partners; terms were not disclosed. Craig said he did not anticipate pursuing a second round.
VALEN TECHNOLOGIES INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic.
Antonym: dec. .
WWW WWW or W3: see World Wide Web.
(World Wide Web) The common host name for a Web server. The "www-dot" prefix on Web addresses is widely used to provide a recognizable way of identifying a Web site. .VALENTECH.COM (1) (Computer Output Microfilm) Creating microfilm or microfiche from the computer. A COM machine receives print-image output from the computer either online or via tape or disk and creates a film image of each page.
FOUNDED: AUGUST 2002