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Slingshot Insurance, an AI-native embedded insurance startup, is emerging from stealth with $27 million in seed funding, it tells Crunchbase News exclusively. Rally Ventures and Skyward Group co-led the round, with participation from insurance industry veterans including Jim Hays, who will join Slingshot’s board. Rally is also a co-founder of the Minneapolis-based startup, as part of the firm’s broader approach. So far, it has co-founded roughly eight portfolio companies that have either launched or remain in stealth. Slingshot, which is led by first-time founder and CEO Ethan Genteman, focuses on small insurance policies that consumers can buy as part of another purchase, such as coverage when booking a flight. Known as embedded insurance, the model puts coverage in front of customers when they might need it. The startup’s software helps businesses offer those policies by connecting them with insurers that back the coverage. It uses AI to process and share data between the two sides, aiming to reduce the administrative work that can make inexpensive policies costly to offer. Its first customer and design partner is Vertical Insure, which serves more than 750,000 customers at an average premium of $25, according to Slingshot. Genteman told Crunchbase News that Slingshot’s first program will launch this month. For now, Slingshot earns revenue as a technology provider working with outside insurers. But the six-person company, which formally began operating July 1, is also pursuing an acquisition that would allow it to back policies itself. “We’re not a carrier yet, but we are rapidly closing on our carrier,” Genteman said in an interview. Making the math work on a $25 policy One product Slingshot is working on would let parents buy insurance when signing a child up for youth sports, Genteman said. A parent spending $2,000 on a volleyball league, for example, might be offered a $25 policy covering cancellation or an injury during the season. Each policy includes paperwork and coordination with an insurer, and can bring potential claims. But when policies cost so little, managing them can quickly eat into the money they bring in, noted Genteman. He believes that as vertical SaaS companies increasingly look beyond traditional subscription fees for growth, embedded insurance is “a largely untapped opportunity” to generate incremental revenue from transactions already happening on their platforms while delivering additional value to customers. “The challenge is that the insurance and regulatory landscape is incredibly complex, and most SaaS companies don’t have the expertise, industry relationships or understanding of where to begin,” he said. Slingshot aims to solve this by providing a white-glove service for those vertical SaaS companies, helping them go from an insurance product idea to “a fully operational offering.” He offered a hypothetical example: A program collecting $500,000 in premiums with a 10% margin would have just $50,000 in margin. “That’s not a viable program for the way incumbent carriers have set themselves up operationally,” he said. Slingshot’s goal is to replace the spreadsheets, emails and disconnected systems used to manage that work with software that connects policy distributors and insurers directly. The company says its AI automates data-heavy tasks while keeping a record of decisions that the businesses involved can review and check. It charges a 5% technology fee to administer programs through its platform. Acquiring an insurer would let it provide both the software and the financial backing, according to Genteman. A customer helped shape the business The difficulties facing Slingshot’s first customer helped bring the startup together. Rally had already helped start Vertical Insure, which uses software platforms to sell insurance to its customers. According to Genteman, that business had opportunities to introduce more products but struggled to find insurers whose technology and processes could keep up. “We can design the products our customers need almost overnight, but the industry is highly regulated, and we need delegated authority just to write and distribute what we’ve built,” Vertical Insure co-founder and CEO Brock Noland said in a statement. “The antiquated approval process on the carrier-side slows everything down.” Even after finding an insurer willing to back a product, connecting the two companies’ systems could create more delays, Genteman said. Slingshot was built to address those problems, with Vertical Insure helping shape its product as a design partner. Noland is also a Slingshot co-founder. The opportunity in vertical SaaS Genteman sees a broader opening among vertical SaaS companies: businesses that sell software tailored to a particular industry. As vertical SaaS companies look for ways to grow beyond subscription fees, insurance could give them another avenue to make money from purchases customers already make through their platforms, argues Genteman. They already know their customers and what they’re buying, putting them in a position to offer coverage that fits the purchase. A babysitting platform, for example, could offer coverage to help parents pay for replacement childcare if a sitter cancels at the last minute. Software used by pet boarding facilities could offer coverage for unexpected vet bills if a pet is injured during a stay. An equipment rental platform could let customers add protection at checkout against accidental damage or theft. Those are examples of what could be developed, Genteman said. Slingshot aims to help vertical SaaS companies take ideas like those and turn them into insurance they can sell, providing both the software and help navigating the insurance industry and its regulatory requirements. “Insurance becomes another product that can be offered naturally within the existing customer experience,” he said. For Justin Kaufenberg, managing director at Rally Ventures, that opportunity is familiar. Before joining Rally, he ran SportsEngine, where insurance sold through its software became a key revenue source. “That experience gave me firsthand insight into the opportunity for software companies to generate revenue through embedded financial products,” he wrote via email. Kaufenberg sees similar potential across Rally’s portfolio, where most companies combine AI products with financial services. He said founders increasingly want insurance partners that can help them introduce coverage quickly. Rally co-founded Slingshot to bring insurance backing, underwriting, reporting, claims handling and distribution together in one business. “To get the carrier, the reinsurance, the underwriting platform, the data flow engine, the reporting capabilities, the claims handling, the embedded distribution engine, and every other part of the offering from a single vendor is unheard of,” Kaufenberg said. From insurance executive to founder Before starting Slingshot, Genteman was chief actuarial officer at publicly traded Palomar Holdings, where he also led data. He joined in 2019 and helped build its actuarial and data team as the company expanded beyond earthquake insurance into other coverage types. That work led him to explore whether newer technology could reduce the costs of running insurance programs. About a year ago, he began coding and building prototypes in his basement. He started talking with Rally toward the end of 2025 and left Palomar on July 1 to run Slingshot. 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