The Zebra Newsroom

Insurtech funding surges, with SPACs and IPOs in sight

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In October 2021, Nerdwallet joined the list of insurtechs going public and announced that it filed for an IPO for a potential valuation of $5 billion. The company reached 21 million unique users per month in the first half of 2021, generating $181.6 million in revenue.

Despite climate change, the pandemic and the increasing frequency of catastrophic events impacting the stability of the insurance industry, insurtechs have enjoyed a fruitful year. But as companies find themselves fully loaded and in the fast lane to going public, will their futures be just as fleeting? 

Willis Towers Watson reported a surge in global insurtech funding to $7.4 billion in the first half of 2021, exceeding investment in all of 2020 and every other previous year. In Q2 alone, the company saw 162 deals with more than $4.8 billion in investment behind them:

  • 57 deals in Q2 2021 were early-stage deals, a 200% increase from Q2 2020 
  • 55% of startup deals involved insurtechs focused on distribution 
  • 73% of funding involved P&C relate companies

Some startups that had successful funding rounds in August include:

  • DealerPolicy: $110 million, Series C 
  • Insurify: $100 million, Series B 
  • Jerry: $75 million, Series C
  • High Definition Vehicle Insurance Group: $32.5 million, Series B
  • Sayata: $17 million, Series A
  • TrustLayer: $15.1 million, Series A
  • DigiSure: $13.1 million
  • Breeze: $10 million, Series A

In addition to the increase in funding for insurtech startups, several companies have gone public via SPAC or IPO in the past year. Insurtech companies are reaching that point earlier in their funding cycles. While that might seem like a sign of great business coming through the investment journey, it could also suggest companies are overeager to make the most of the bullish investment landscape.

SPACs are shell companies that solely raise funds through a public offering that takes a private company public with a merger later, allowing startups to go public easier. Unlike IPOs, SPAC companies work in reverse order: rather than a company selling shares to public investors, the SPAC goes public on the stock market by selling shares to investors and tries to acquire a company within two years.

Below are a handful of insurtech companies that have gone public this past year: 

Although the uptick in insurance tech companies finding funding and going public seems promising, the heightened risk of these companies failing lingers: According to Willis Towers Watson’s Quarter InsurTech Briefing, more than 450 insurtechs have failed over the past decade, and success has proven to be limited. 

The briefing also suggested that insurtech stock prices move up and down together, almost regardless of how the business themselves are performing.

While this past year brought several prominent wins to the industry, it’s important to keep in mind that even the greatest and most innovative business models could tank in this unpredictable time. Finding ways to differentiate and deem a business as truly valuable could be the only way to stay afloat. 

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