Extend Raises $16.4M, Aims to Make Extended Warranties Broadly Available

Extend, a provider of extended warranty programs, has raised $16.4 million in new capital and acquired assets from Aon division Affinity Insurance Services as it looks to make extended warranty programs available beyond enterprise-scale retailers.

A report from Research and Markets estimates the warranty segment is worth $45 billion and will reach $50.2 billion by 2026.

Extends said the funding will help it provide merchants of all sizes the ability to offer extended warranty programs and protection plans to consumers on websites on or stores.

“Before Extend, extended warranties were only accessible to the top 1% of merchants and often had a negative reputation with consumers, which left a huge portion of the market unable or unwilling to offer protection plans,” said Woodrow Levin, founder and CEO of Extend, in a release. He added Amazon, Apple, Costco and Best Buy were among the large retailers who have been able to benefit from selling extended warranties.

The funding round was led by GreatPoint Ventures with participation from Pritzker Group Venture Capital, Lightbank and Shah Capital Partners, along with ex-CEO of Equifax Rick Smith, Katerra CEO Michael Marks, DraftKings CEO Jason Robins, and Village Global cofounder Erik Torenberg.

Extend said it has also “purchased several agreements and assets related to administration of warranty programs in the U.S.” from Affinity Insurance Services, an affiliate of Aon. Through the acquisition, former Aon Warranty Solutions senior vice president Pedro Rodriguez will join Extend as senior vice president of insurance and strategy.

Extend will use the funding to scale its operations to grow the business. Current clients have combined annual sales of more than $11.5 billion, the company said.

Benefits of providing extended warranty programs digitally for retailers include increased revenue and conversions and enhanced loyalty. Extend’s Intelligent Offer Engine uses machine learning to test and recalibrate the parameters of offers. The company said its technology is a key reason why its warranty and protection plan attach rates are double the industry average for legacy online protection plans.

“The acquisition from Affinity Insurance Services, Inc., an affiliate of Aon plc clearly sets up Extend to be a dominant player in extended warranties, especially in a rapidly growing environment of online sales,” Andrew Perlman, Managing Partner at GreatPoint Ventures, said in the release.

Multichannel Merchant took a deeper dive into the deal in this Q&A with Extend CEO Levin:

How important are extended warranty plans in ecommerce? For what kinds of products?

Extended warranties allow merchants to create multiple touchpoints with their customers after the point of sale, ultimately creating the opportunity to turn them into loyal, repeat customers. The top 1% of retailers all generate meaningful, high-margin bottom line net income from extended warranties. For example, Best Buy generated 52% of its net income from the sale of extended warranties and protection plans in 2017. In order to level the playing field, it’s important for all online merchants to be able to offer extended warranties to their customers, so that they can compete with the retail giants of the world like Amazon, Costco and Best Buy. Extended warranties and protection plans are sold alongside consumer electronics, appliances, medical devices, auto parts, sports and fitness equipment, jewelry and watches, furniture and much more.

How does Extend make them more available for SMBs?

Extended warranties have largely not been available for SMBs in the past because they were either too expensive or complicated for smaller businesses to implement – there was not an easy way to integrate scalable solution that served the SMB market. With Extend, online merchants of any size can now rapidly integrate and offer customer-friendly extended warranties on the products they sell directly on their websites through Extend’s pre-built integrations and robust APIs.

Can you give us a bit more on what the funding will be used for?

Extend will use the funding to continue to build tools to better serve its rapidly expanding list of merchant partners and ultimately their end customers, as well as expand its development and sales teams.

What types of companies are using Extend?

Merchants currently using and signed up to utilize Extend as their exclusive extended warranty provider span across a variety of industries such as consumer electronics, automotive and fitness, including SoClean, August Locks, 1More, Club Cadet, Wynd, Zebit, Coinmine, Polycade, RealTruck, DS18, Outcast Garage and New Air.

Douglas P. Clement is principal of Boardwalk Media + Communications