Startup founders face new decisions and risks around benefits, recruiting, corporate activism and data privacy; 42% plan to limit recruiting efforts to states in which abortion rights are upheld

In an addendum to its Startup Risk Index 2022 report, commercial insurtech Embroker recently conducted a Risk, Reputation and Reproductive Rights survey of over 500 VC-backed startup founders to explore if and how their perceptions around risk are shifting due to the overturning of Roe v. Wade. This occurred as a result of the U.S. Supreme Court’s recent landmark ruling on Dobbs v. Jackson Women's Health Organization, determining that the Constitution does not confer a right to abortion.

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Risk, Reputation and Reproductive Rights: the New Business Concerns for Startups (Graphic: Business Wire)

Recruitment & Benefits

Over half of VC-backed startup founders (53%) intend to keep recruiting and hiring in states in which abortion rights are not upheld, but plan to update benefits so staff have access to reproductive health benefits regardless of the state where they live. Separately, 42% plan to now limit their recruiting efforts to states in which abortion rights are upheld - indicating that states with abortion bans may face economic losses as a result. This also may have larger implications for women in those states as their choice of employment – and the health benefits that come with it – could now be more limited.

Startups face unique risks in light of the decision due to their size and more limited resources as compared to large corporations. This is seen in the findings, as over a third (36%) of founders surveyed said they wish they could make adjustments to better support staff impacted by the decision, but currently lack the resources to do so. Another 31% plan to increase benefits and care options for employees to help mitigate risks resulting from the Supreme Court decision.

“Big tech companies in particular - with deep pockets and a consistent track record of corporate activism - are helping to set a precedent for all companies as they attempt to negotiate this new reality,” said Eric Blancke, head of insurance, Embroker. “However, smaller businesses face more practical concerns like potential customer backlash or lost revenue - consequences that are harder and innately riskier for startups to absorb.”

Reputation

The survey also found that the majority of startup founders have communicated internally with staff about the recent ruling, at 80 percent. However, the data is more split in terms of their communication outside of their business, with less than half of those founders (39%) choosing to be vocal externally as well. Despite many being vocal both inside and outside their organizations, the risk around their reputation is top-of-mind, with 75% of founders concerned that their company’s stance on the ruling may impact their reputation. This includes their reputation as a leader in the startup community (45%) as well as with clients/customers (42%), their employees (42%), their personal reputation (38%), and investors (32%).

Cybersecurity

Concern over data privacy and protection has also intensified significantly, with four out of five founders citing a legitimate uptick in concern about the safety of their private data in light of the recent ruling. What’s more, nearly half (47%) of total respondents ranked themselves as being "very concerned" about a greater risk for legal battles, potential leaks, and targeted domestic cyber attacks under the circumstances.

Lawsuits & Other Disruptions

Data also revealed that founders see the greatest potential risk around the following: (1) Disruption to the business due to increased employee maternity leave or pregnancy-related needs (44%); (2) Claims against management based on decisions or statements made about reproductive benefits and rights (43%); and, (3) Employee claims tied to discrimination/wrongful termination/equal pay/equal opportunity/harassment, etc. (40%).

For startup founders and leaders, acknowledging and assessing the risks their companies face is the first important step in navigating today’s increasingly complex legal, social and economic landscape.

To learn more about the risks startup founders are willing to take to grow their business, visit: www.embroker.com.

Methodology:

For the Risk, Reputation and Reproductive Rights report, Embroker surveyed over 500 U.S.-based VC-backed startup founders in July 2022. It was completed online and responses were random, voluntary and anonymous.

About Embroker

Embroker is transforming commercial insurance by making it radically simple for businesses to get the right insurance at the best price. Embroker focuses on industry-specific coverage for the most complex and inefficient lines of insurance, such as Directors and Officers, Employment Practices Liability, Cyber, and Professional Liability. Embroker uses predictive modeling powered by proprietary technology to automate underwriting and make the buying process simple, fast, and more affordable. Through Embroker Access, Embroker provides partner agencies and wholesalers with the capability to offer all of Embroker’s industry-leading insurance products to their customers. Founded in 2015, Embroker is headquartered in San Francisco and has raised more than $140M in funding from leading Fintech and Insurtech investors.

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