AI, Layoffs, and a New Wave of Employee Lawsuits Expose Small Businesses to Litigation Risks; Counterpart’s Agentic Insurance™ Platform Protects Them

Business Wire

Early Investors Behind SpaceX Double Down on Three-Time Founder Tanner Hackett’s Latest Company, Bringing Total Funding to $106M

LOS ANGELES--(BUSINESS WIRE)--
Counterpart, the specialty insurance company built for the AI era, today announced the close of its $50M Series C financing round led by Valor Equity Partners, with continued participation from existing investor Vy Capital. The round brings Counterpart's total funding to $106 million.

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Photo of Counterpart at the Nasdaq tower.

The announcement comes at a moment of unprecedented risk for American small businesses. The U.S. Equal Employment Opportunity Commission (EEOC) fielded nearly 270,000 inquiries in FY 2025 and recovered $528 million through pre-litigation enforcement alone, the highest such recovery in its 60-year history. Counterpart’s proprietary data confirms significant increases in Disability Discrimination, Race / Color Discrimination, and Sexual Harassment claims, which often exceed $100,000 per claim before a single attorney fee.

AI is only kindling the flame. In 2023, iTutorGroup's AI automatically rejected applicants due to age, and the EEOC settled the case for $365,000. Three years later, 76% of small business owners use AI but only 14% have fully integrated it, according to Goldman Sachs' 10,000 Small Businesses Voices survey. As small businesses move to fully integrate AI to stay competitive, claims will only accelerate.

Even as risks grow, millions of small businesses still lack access to the insurance built for these exposures: Professional Liability, Employment Practices Liability, and Directors & Officers. Fewer than 33% carry these policies, and according to Gallagher's 2025 Survey of Small Business Owners, 89% are not confident they would be covered if something went wrong. The result is a dangerous illusion of safety.

"We are witnessing a generation of small business owners walking into the most litigious environment in American history without protection," said Tanner Hackett, CEO and founder of Counterpart. "AI-related lawsuits are already being filed targeting hiring, content creation, and customer service practices. Companies cannot afford to stand still as AI advances, but every step forward brings new and often unseen risks. We built Counterpart because the legacy insurance market isn’t equipped to solve these types of challenges on their own, and the cost of inaction is increasing for all stakeholders."

Counterpart has spent over half a decade building the data, technology, and underwriting expertise to price and manage these risks with a precision the traditional market cannot match, processing more than 250,000 applications and writing over 35,000 policies through a network of 2,800 brokers and four A rated carriers. In addition to boasting industry leading loss ratios, the company has helped businesses settle claims over 2x faster and with over 10% better outcomes than industry benchmarks. Counterpart reported nearly 175% premium growth in 2025.

“We look for companies that become the category, and Counterpart is doing exactly that," said Jon Shulkin, Partner at Valor Equity Partners. “Counterpart saw the AI inflection coming years before anyone else and understood that the right technology, in the hands of the right insurance experts, could transform the experience for every party in the transaction. We have seen that each policy Counterpart writes and each claim it handles informs its models and improves the experience for the next customer.”

The new capital will support four areas of growth: launching new specialty insurance products; building industry-specific programs; expanding claims and risk management capabilities to help businesses address critical exposures; and collateralizing Counterpart Insurance Company, which will enable it to retain risk and further align incentives with partners across the value chain.

About Counterpart

Counterpart is building the operating system for business risk. The company pioneered Agentic Insurance™, combining deep insurance expertise with modern AI to deliver smarter, faster management and professional liability solutions for brokers and the businesses they serve. Backed by five A rated carriers and reinsurers, including Aspen, Markel, and Westfield Specialty, Counterpart has been recognized by Inc. Magazine, CB Insights, and Business Insurance as one of the most innovative companies in insurance today. Learn more at yourcounterpart.com.

About Valor Equity Partners

Valor Equity Partners is an operational growth investment firm focused on investing in high-growth companies across various stages of development. For decades, Valor has served its companies with unique expertise to solve the challenges of growth and scale. Valor partners with leading companies and entrepreneurs who are committed to the highest standards of excellence and the courage to transform their industries. For more information on Valor Equity Partners, please visit www.valorep.com.