Authentic’s Regulatory Moat: How Cole Riccardi Turned Compliance Complexity Into Competitive Advantage

Authentic’s Regulatory Moat: How Cole Riccardi Turned Compliance Complexity Into Competitive Advantage

Most founders building in regulated industries spend board meetings complaining about compliance. Cole Riccardi spent those months building a moat.

In a recent episode of Category Visionaries, Cole Riccardi, CEO and Founder of Authentic, explained how the company turned captive insurance regulation—a nightmare of state domicile approvals, reinsurance arrangements, and legal frameworks—into intellectual property that competitors can’t easily replicate. The regulatory complexity that keeps most companies out became the reason Authentic’s customers stay in.

Here’s how to stop seeing regulation as a barrier and start seeing it as your best defense against competition.

The Regulatory Reality of Captive Insurance

Captive insurance has been around for 30 to 40 years, primarily serving massive enterprises. “Captive insurance started 30 or 40 years ago where really big companies didn’t want to pay third party insurance carriers,” Cole explains. “So an example would be like, Walmart didn’t want to spend $200 million in premium to Chubb. So instead they started Walmart insurance company to essentially self insure themselves.”

The reason this stayed limited to enterprises isn’t economics—it’s infrastructure and regulatory complexity. “In setting all of that up, it saves Walmart a lot of money, but it’s a real challenge,” Cole notes. “They need to go through regulatory approval and find reinsurance and figure out how to do all the insurance pricing.”

Every company that wants to start a captive faces the same gauntlet: regulatory filing in their state of domicile, securing reinsurance partners, capitalizing an insurance carrier, building underwriting models, and creating the distribution infrastructure. It’s months of legal work, hundreds of thousands in fees, and expertise most companies don’t have.

This is where most fintech founders would pivot to a less regulated model. Cole saw opportunity.

The Insight: Regulatory Complexity as IP

The breakthrough wasn’t finding a way around regulation—it was systematizing it. “I do think we’ve created quite a bit of legal IP, a really great legal to our business,” Cole shares. “We’ve spent a lot of time with the regulators and our state of domicile. We’ve spent a lot of time with some incredible lawyers to really work within the existing captive structure, but make it scalable.”

Notice the framing: legal IP. Not legal compliance, not regulatory overhead. IP—intellectual property that creates value and defensibility.

This reframe changes everything. When you view regulatory work as compliance, you minimize it. You find the cheapest lawyers, do the bare minimum, and move fast. When you view it as IP creation, you invest. You work with the best lawyers, you build relationships with regulators, you document processes, and you create systems that can be repeated.

Authentic spent months on this foundation. “And anyone who wants to go through that pain, I truly wish them the best,” Cole adds with knowing humor. That pain—the months of regulatory back-and-forth, the legal structuring, the reinsurance negotiations—is now a competitive moat.

How the Moat Works in Practice

The moat manifests in Authentic’s sales conversations. When prospects consider building their own captive infrastructure, they face a decision: invest 12-18 months and significant capital navigating the regulatory process themselves, or give Authentic “a small sliver of the economics” and get everything turnkey.

“That’s really a big part of our pitch,” Cole explains. “You just give away a small sliver of the economics to Authentic versus going and domiciling your own captive insurance company yourself.”

The economics make this compelling. Most vertical software companies or franchisors aren’t in the insurance business—they’re in the software or franchise business. They want to offer insurance to their customers, but building the regulatory infrastructure to do so isn’t their core competency.

Authentic’s regulatory moat means prospects have three options: build it themselves (12+ months, high cost, regulatory risk), partner with traditional carriers (poor economics, no control), or use Authentic (fast time to market, controlled experience, better economics than traditional partnerships).

The regulatory complexity eliminates option one for most companies. The poor economics and lack of control eliminate option two. That makes Authentic the only viable path.

The Competitive Dynamics

Here’s why regulatory IP creates a durable moat: it can’t be bought or copied quickly. A competitor could raise money and hire engineers to build similar technology. They could hire salespeople to compete for customers. But they can’t shortcut the regulatory process.

“There’s a couple of different buckets” of competition, Cole explains. “Folks who want to set up their own captive can engage a captive services group at a large broker. That broker can do a lot of the legal and filing work, but then you’d still be required to go find reinsurance, capitalize your insurance carrier, figure out all of the underwriting, figure out the distribution, the front end platform.”

Traditional captive services groups handle part of what Authentic does, but not the full stack. They’ll help with legal filing, but customers still need to piece together reinsurance, underwriting, technology, and distribution. It’s the difference between getting help with one regulatory hurdle versus having the entire infrastructure ready to go.

The other bucket is embedded insurance platforms. “There’s some other folks that offer more embedded insurance in the form of an embedded agency,” Cole notes. “So selling a traditional carrier’s product through a software company, and they’re sort of the bridge between these two parties, almost like an integration layer between end customers and a traditional carrier.”

These platforms avoid the regulatory complexity entirely by just reselling existing carrier products. But they can’t offer the economics or control of a true captive model. It’s a different solution to a different problem.

“In terms of the turnkey captive platform and who we’re pitching, we’re really not seeing anybody in some form of RFP process,” Cole observes. The regulatory moat is working—there’s no direct competition because the barrier to entry is the months of regulatory work Authentic has already completed.

The Investment Thesis: Paying for the Moat Up Front

Building regulatory IP requires a different investment thesis than typical SaaS. You’re spending significant time and money before you have a product customers can use. You’re hiring lawyers instead of engineers in the early days. You’re in meetings with regulators, not designing user interfaces.

This doesn’t fit the lean startup model of ship fast and iterate. You can’t MVP your way through insurance regulation. You need to get it right before you launch, which means significant upfront investment.

Slow Ventures understood this when they wrote Authentic’s early check. They weren’t just betting on Cole’s vision for embedded insurance—they were betting he could navigate the regulatory complexity to build defensible infrastructure.

The result is a different type of company. Authentic doesn’t compete on product features that can be copied in weeks. They compete on regulatory infrastructure that took months to build and would take competitors just as long to replicate.

When Regulatory Moats Work: The Framework

Not every regulated industry offers the same moat-building opportunity. Three conditions need to exist:

The regulation must be complex but stable. Insurance regulation is extensive, but the frameworks are well-established. You can build on them predictably. If regulation is changing rapidly, your IP becomes obsolete.

The regulation must apply to all competitors equally. Authentic’s regulatory work creates advantage because everyone faces the same requirements. If incumbents have grandfathered exemptions or special treatment, new entrants can’t compete on equal footing.

The value of the product must justify the regulatory investment. Captive insurance offers compelling economics—enough to justify months of legal work. If your product’s value is marginal, customers won’t wait for you to navigate regulation, and investors won’t fund the journey.

When all three conditions exist, regulatory complexity becomes opportunity. When they don’t, it’s just a barrier.

The Practical Playbook: Building Your Regulatory Moat

If your market qualifies, here’s how to turn regulation into IP:

Invest in the best legal counsel, not the cheapest. Cole worked with “some incredible lawyers” to structure Authentic’s captive model. Top-tier legal expertise costs more upfront but creates defensible IP.

Build relationships with regulators, not just compliance. Time spent with “regulators and our state of domicile” isn’t just about getting approved—it’s about understanding the system deeply enough to innovate within it.

Document everything as process, not just precedent. The goal isn’t just to get your company approved. It’s to create a repeatable system for onboarding new customers within the regulatory framework.

Frame it as IP creation in fundraising conversations. Investors understand moats. Help them see regulatory work as moat-building, not just compliance overhead.

Be patient with the timeline. Regulatory IP takes months to build. That patience is part of the moat—competitors who won’t wait can’t compete.

The Sales Advantage

The final benefit of regulatory IP is how it changes sales conversations. Cole doesn’t need to convince prospects that captive insurance is better than traditional partnerships—they already know. The entire pitch is: “You could spend 12-18 months building this yourself, or you could launch next quarter with Authentic.”

“Some people do consider if it’s worth building themselves, and then they tend to circle back to us pretty quickly,” Cole notes. The regulatory complexity does the selling. Prospects start by exploring DIY, realize the scope of work required, and come back to Authentic.

That’s the ultimate moat—when the barrier to entry is so high that prospects convince themselves they need you.

Most founders see regulation as something to minimize or work around. Cole saw it as something to systematize and own. The result is a company where the hardest part of building the business became the reason competitors can’t catch up.