‘Applying for a pension was a pain so I invented a better way'

Times

2 days ago

Luke Mackey is a rare specimen: a 31-year-old serial tech entrepreneur, digitally native, who is manically interested in pensions and health insurance.
Boring? Hardly. Kota, the company Mackey founded with his partners Patrick O'Boyle and Deepak Baliga, has raised more than €20 million from a list of investors that includes some of Europe's savviest venture capitalists.
They include Northzone, an early backer of Spotify; EQT Ventures, part of the investment empire of Sweden's mega wealthy Wallenberg family; and Eurazeo, one of France's largest backers of tech. The local firm Frontline VC, which has a string of stunning exits to its name, is also a shareholder.
The digital broker Kota has signed up 150 companies to use its technology to deliver pension and health insurance benefits to 'tens of thousands' of employees. Most work for fast-growing technology companies. It is partnering with 25 pension and health insurers — Mackey calls them carriers — across Europe, Canada, South Africa and India, and recently added its first insurer in Germany. Carriers include the South African-owned Vitality, the German multinational Allianz and the Spanish health insurer Sanitas.
'When we started it was taking a quarter [three months] to integrate a carrier,' he says. 'Our goal now is to add a [new] carrier every two weeks.'
A number of global HR tech companies such as remote.com and HiBob are also embedding Kota technology into their platforms, accelerating the proliferation of the Irish company's technology and its revenues.
Kota is not yet four years old.
'I have been in a start-up where you are working a lot of late nights, continuously pushing the boulder up the hill,' Mackey says. There are a lot of late nights at Kota, he adds, yet 'chasing the boulder down the hill is a lot more fun'.
It's easy to see what's attracting venture capitalists. Making benefits easy for SMEs, increasing pension and health coverage, the company is addressing a huge market.
When Mackey pulls the Kota app up on his smartphone, he can check his pension and increase his salary contribution. He examines his health insurance policy to see if he is covered for a forthcoming sinus operation.
It's frictionless, à la Revolut. It integrates easily into the client company's payroll and HR system, à la Stripe.
Is Kota the Revolut or Stripe of benefits? 'It depends on who we are talking to, HR or IT department,' he says.
The company is also leaning into a sizeable opportunity in its home market. The government's auto-enrolment or mandatory pension regime, where every employee in the country must be offered a pension, is due to come into force from January. The state scheme MyFutureFund, which includes a top-up from the government, has its limitations so Kota is mounting a national roadshow to pitch its alternative, which it says is a quick, easy and cost-effective means of becoming auto-enrolment compliant.
It is piggy-backing on a state initiative to increase awareness of pensions, to lift its profile through 20 breakfast and lunch meetings. Clever.
Kota staffers pulled a late night last week stuffing envelopes with handwritten invitations with a QR code for registration. Mackey, a marketing graduate, was tickled by the idea of a digital-first tech company using 'snail mail' as opposed to an email shot. Auto-enrolment is 'another tailwind', he says.
Mackey, a Dubliner, started his first business career when studying for his marketing degree at the National College of Ireland (NCI). With a school friend from CBC Monkstown he set up Spacefox Studios, which made marketing videos and built websites for restaurants and coffee shops. His office was a 'wherever I popped myself down', which was usually a coffee shop.
He spent a lot of time watching queues, and customer frustration, building at peak periods. When he graduated from NCI in 2016, Mackey hooked up with a college friend, Alan Haverty, to create Bamboo, a mobile ordering app that made it easier for customers to pick up orders from restaurants close to their place of work at peak times.
Within three years the company partnered with 100 restaurants in Dublin, Cork and Galway.
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Funding the venture was 'painful', Mackey says. It raised cash from a small number of private individuals and Enterprise Ireland, who invested €225,000. Joe Elias, the US investor who invented vodka 'baggies', or spirits in a pouch, and sold the Irish company Retail inMotion to Lufthansa, also lent the company €200,000.
In early 2019, an Australian company showed an interest in acquiring Bamboo as a launchpad into the European market. As talks went on, Bamboo continued to spend on its development.
When the Australian suitor walked out, Elias moved to inject more funds and take control. Mackey left in early 2020, just months before the pandemic would crater the business.
He needed a job — 'I had no savings' — and applied for the role of Ireland manager for Bolt, the mobility app.
At 26 he was Bolt's first Irish employee as it looked to challenge the incumbent MyTaxi, which has become FreeNow.
'My job was to open up and grow the market,' he says. 'So that was everything from getting the licences to operate, hiring the core team, finding an office that our drivers could go to, marketing [Bolt] to drivers to get supply, and marketing it with the passengers to get demand. And doing that in a really short period of time.'
It was, he says, one of Bolt's most successful launches. One of his tasks was to put a benefits package in place for employees, which then numbered just five. Like most of his peers, Mackey knew nothing about pensions or health insurance.
'I quickly learnt that brokers don't like working with small businesses. We were a five-person team, wanting to set up a pension. That's not very lucrative for them.'
Through his mother, Mackey eventually found a helpful broker. He was sent a PDF by email that he downloaded and printed out. 'I had to fill it out and then scan and send it back to the broker,' he says.
He circulated the PDF to other members of the team. None filled it out. It was 2021 and the stock markets were roaring, and his peers were busy trading stocks on Revolut.
'They just thought, jeez, this is a pain in the ass.'
When the scheme was set up, there was more paper. 'I just thought there has to be a better way to do this,' he says.
Mackey circled back and enlisted O'Boyle and Baliga, who had worked on Bamboo, to start developing the app. Its first provider was Irish Life.
Kota secured approval to act as an insurance intermediate from the Financial Conduct Authority in the UK and the Central Bank of Ireland, which allowed the company to passport its service into Europe.
Mackey never saw himself as an insurance intermediary. 'When you are a broker, it means you can talk to insurance companies,' he says. 'And when you talk to insurance companies, we can show them what the product looks like.'
His experiences at Bolt taught him about keeping costs down and building at pace. Under the Kota model, insurers get access to distribution free of charge, while companies pay just €9 a month per employee, considerably lower than broker fees. Kota does not offer advice, but it does offer support. 'We talk through options,' he says.
There are no commissions, no contracts, and the HR department is not shuffling mounds of forms and paperwork.
Its clients are fast-growing, like Kota itself, which is hurtling towards 50 employees. The roll call includes Tines, arguably Ireland's hottest start-up, Belfast's Cloudsmith and the UK online car marketplace Carwow.
It's a natural fit for rising tech stars, and while Kota revenues grow naturally from adding new customers, it also benefits from the growth of its existing customer base. The multiplier effect is potentially very powerful.
This time around, fundraising has been an awful lot easier. That is partly because Mackey, O'Boyle and Baliga had done a lot of the groundwork before launch, speaking to up to 70 HR and insurance professionals to thoroughly research the opportunity. The investment deck included 20 pages of research with links back to the conversations. 'There was a lot of data,' Mackey says.
The plan was to raise €600,000 for the trio to 'kind of hack away at a product for a year or so, and see where it goes', he says. But the pitch got traction. 'The angel [investor] bit got stoked up and then we got into a pretty hot venture round with VCs offering us a million [euros]. We had people telling us, 'You should really talk to this person'.'
It was pushing one open door after another. 'One VC told us we know this area really well, we have been looking at this for the last three years, waiting for somebody with something like this to walk through the door,' he says.
The founders met Elise Stern of Eurazeo at Dublin's Dogpatch Labs when they were looking for pre-seed funding. At the time the cheque size did not fit the VC's investment profile. Three years later, when Kota went out on a Series A fundraising, it took Stern just four weeks to sign up.
Aside from the heavyweight VCs, Kota can count Cocoa, the high-profile London angel investor, and the early-stage funders Plug and Play and 9 Yards, which was founded by George Osborne, the former UK chancellor, as backers, with the Cape Clear founder David Clarke and Alexis Valentin, the former Meta executive, also on board.
Mackey says his ambition is to build 'a great Irish technology company' and ultimately take Kota to the stock market. He certainly has the backers to get there. On a sweltering hot August day he can take stock on how far the company has come.
'It feels like it's still January or February because of just how quickly the year has gone by, and how exciting it's been,' he says. 'And that's just how it feels when you're a start-up. It's warp speed, it's high ambition, it's play to win.'
Age: 31Lives: DublinMarital status: Single (in a relationship)Education: CBC Monkstown, National College of IrelandFavourite film: Stand by MeFavourite book: The Hard Thing About Hard Things by Ben Horowitz
Working: I get up at 7.20am. I start the morning in the coffee shop, on my laptop, usually for an hour, and then get into the office for 9am or 9.30am, and I am there until about 8pm or 9pm. Then home, dinner and I try to get some exercise. I will do a couple of hours on a Sunday afternoon too — it's quiet. It sounds a lot but I genuinely love what I do.
Downtime: Saturday is for sleeping in and catching up with friends and family. In the winter weeknights, I went out for a sauna with a few other founders — I know, it's very tech bro — but it's just a great way to clear the mind. I run when I can; my girlfriend runs so we run together. I did my first marathon in Copenhagen last year and hope to do a half-marathon before the end of the year. I used to race mountain bikes and it's something I absolutely miss. Sometimes you work hard to get the freedom to go back to things like that.