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US Insurtech Preview

Fundraising difficulty to drive early-stage sales

Market overview

The insurtech space is expected to see more smaller size deals as the current tough environment for fundraising puts early-stage firms to the selling block.

Many insurtech startups are talking to existing investors for bridge financing to get through the economic slowdown. Insurtech firms at Series B, C and D stages, especially those that cannot attract funding, have been showing more interest in exploring a sale recently, a sector advisor said.

Insurtech valuations before the COVID-19 outbreak were very high, scaring away many buyers. As target size skews to the smaller side and multiples are expected to reflect the higher risks, the space could see a correction in valuation, the sector advisor said. Coming out of the crisis, insurtech firms with revenue in the range of USD 10m may fetch a high-single-digit multiple on EBITDA, he added.

As states enforce lockdown rules due to COVID-19, the insurance space expects to see an accelerated adoption of digital solutions and data usage, said Kegan Greene, director of financial technology at Houlihan Lokey. Insurtech firms related to consumer engagement and marketplaces, software, and data and analytics should show more resilience in the current environment, Greene said.

While traditional insurance service businesses build their strength in underwriting, insurtech businesses tend to develop technology specialties in areas such as digital marketing, alternative data analysis and workflow automation. It has made them attractive to the incumbent players.

For example, for insurtech firms that serve businesses, Aon [NYSE:AON] acquired CoverWallet in November 2019, a deal Mergermarket previously reported in the range of USD 300m. On the direct-to-consumer side, Prudential Financial [NYSE:PRU] acquired Assurance IQ for USD 2.35bn in September 2019.

Recent deals

Here’s a list of insurtech startups that have been active in the venture capital market

CompanyFunding to date (USD m)
Root Insurance527.50
Next Insurance381.00
States Title229.60
Hippo Insurance209.00
Pie Insurance188.00
Ethos Life106.50
Kin Insurance64.00
One Concern57.80
Bold Penguin50.50
Spruce Holdings50.10
Corvus Insurance45.80
CLARA Analytics36.50
Slice Labs35.50
Groudspeed Analytics32.00
Cape Analytics31.00
PartsTrader Markets30.00
Carpe Data26.70
Protecht, Inc21.90
Boost Insurance18.00
Tomorrow Ideas16.40
Troy Medicare12.80
Kelly Klee12.50

Companies to follow


Spruce, a New York City-based online real estate title and escrow services firm, is benefiting from the increasing digitalization of real estate transactions during the coronavirus pandemic, said Patrick Burns, CEO and co-founder. The shift from in-person closings to digital proceedings, combined with a surge in mortgage refinancing as interest rates fall, has caused revenue to increase 20% month-over-month so far this year, he said. While the insurance tech firm has seen a slowdown in new home purchase activities, it has been more than offset by an uptick in refinancing activities, Burns said. While Spruce has received occasional inbound inquiries from suitors, it has no plan to sell, Burns said.


Coalition has bypassed acquisition interest from insurance providers and other suitors, and instead is looking to grow, said Founder and CEO Joshua Motta. The San Francisco-based cyber insurance and security company expects to hit USD 100m in annual recurring revenue by the end of 2021 and could look at making add-on acquisitions to get there, he said. Coalition’s search for acquisition comes after it announced raising USD 90m in equity capital led by Valor Equity Partners on 20 May. That raise valued the company at USD 890m, said Motta. Motta said Coalition will look at acquisitions for technology, talent or even geographical expansion, while insurance add-ons - such as managing general agent (MGA) businesses or insurance companies themselves - are also interesting to the company. Targets could be anywhere from pre-revenue to double-digit revenue producing, and Coalition would like to do a mix of equity and cash in any deal, he added. The company started its recent raise late last year and saw acquisition interest while raising the money, said Motta. However, after receiving the interest from unnamed suitors, the company became re-dedicated to raise the funds and take advantage of the market itself, said Motta. The round closed just before the coronavirus pandemic took hold in the US, said Motta. While there was quite a bit of scrutiny for the round from investors, that mainly was because of the raise itself and the valuation, not because of the looming health crisis, said Motta. The company could have raised at more than a USD 1bn valuation, but wanted to keep dilution at 10%, said Motta.The company was not in need of money, still having USD 24m in the bank from a USD 40m funding round in May 2019, said Motta. Founded in 2017, Coalition has raised USD 125m in equity funding to date. Coalition is not concerned with an exit, and aims to be its own independent company, said Motta. The company does not believe it will have to raise money again and should become profitable sometime next year, he added.

Fabric Insurance Agency(5/5/2020)

Fabric Insurance Agency, a New York-based online life insurance managing general agent (MGA), has received inbound interest from investors as the COVID-19 outbreak prompts demand for insurance, said Adam Erlebacher, CEO and co-founder. Erlebacher said he is in talks with existing and new investors, and the size for the next round is likely to be more than USD 20m. Fabric has raised USD 12.5m to date, he said. Fabric saw a 2.5x increase in sales from February to March, and the sales sustained in April, Erlebacher said. Insurance carriers’ traditional face-to-face sales and medical exam-based underwriting have been disrupted amid the pandemic, and consumers are looking for digital solutions, he said. Asked about a potential sale, Erlebacher said, “We are very happy as an independent company right now.” Logical buyers include financial services firms and technology firms, he said.


Compare.com, an auto insurance comparison site, does not need additional funding to reach profitability, but it could be open to more cash as it looks to add new product offerings, said CEO Allie Feakins. An acquisition is not core to its growth plan, but it could look for ways to streamline the customer experience, either through data or technology. Compare.com will not look for an advisor until a tangible opportunity is on the radar. While COVID-19 is likely to force some companies in other industries to sell, Feakins does not expect those opportunities to abound in the auto insurance sector. The virus does not change the fundamentals as much as it does for companies in other industries, she said. That’s because even if people are driving their cars less often, car insurance is still required by law. Although demand has dipped slightly from the COVID-19 outbreak, Feakins expects the auto insurance industry will be “pretty resilient” overall. Although there has been recent consolidation in the industry, Compare.com has no pressure from Admiral Group for an exit, Feakins said. The chief executive would review any offers, but she is not proactively seeking a sale.


Insurify, a Cambridge, Massachusetts-based online insurance comparison platform, plans to launch into Medicare and Medicaid in 2021 but will not accelerate that timeline because of the COVID-19 outbreak, said Snejina Zacharia, founder and CEO. Insurify posted its strongest month on record as the COVID-19 outbreak fueled comparison shopping online. Traffic quickly recovered following a brief dip in demand in March as governors around the country started to institute stay-at-home orders, driving the month’s revenues up 36% month over month and 80% year over year, Zacharia said. Insurify will not look for Series B funding this year, but it plans to seek more capital toward the end of 2021, Zacharia said. At the current growth rate, it is likely to hit profitability in a couple of years, Zacharia said. The insurtech startup passed on a buyout offer in the summer of 2019, Zacharia said, though she noted that it is open to a relationship with the right partner. The chief executive called an initial public offering the “logical next step,” though that move is likely five to six years away. Insurify would want to turn a few hundred million dollars in revenue before hitting the public markets, Zacharia said.


Policygenius, a New York-based consumer insurance startup, has seen an uptick in demand for life and disability insurance products amid the coronavirus outbreak, said Jennifer Fitzgerald, co-founder and CEO.The global coronavirus pandemic has driven what Policygenius considers to be higher than normal demand for those products, Fitzgerald said, adding that her team is staffing up to meet that increase. In 2019, Policygenius posted USD 60m in run-rate revenue. The company has grown revenue 2x to 3x every year since it was founded in 2014, and it is on track to maintain that growth this year, Fitzgerald said. Policygenius, which makes money through commissions, is not yet profitable. With its USD 100m Series D, Policygenius is well-capitalized “for the foreseeable future,” Fitzgerald said, noting that its Series C funded the company for almost three years. Although a Series E is not on the roadmap, Fitzgerald said Policygenius could pursue it if additional growth equity capital would allow the company to expand its market reach in new ways, such as more aggressive M&A activity.The company has had conversations with potential strategic partners over the years, but nothing has yet made sense as opposed to continuing to grow on its own, Fitzgerald said. It is possible that Policygenius could look to go public in the future.


CoverHound, a digital property and casualty insurance platform, is looking for investment bankers to explore a potential sale to a strategic, said CEO Keith Moore. The San Francisco-based company, which was founded in 2010, is considering two separate sales: one of CoverHound and one of CyberPolicy, a subsidiary founded in 2016 for its commercial efforts in cybersecurity. It has already received about 10 formal offers, including ones from major insurance carriers, Moore said. Despite the severe stock market decline as a result of COVID-19, CoverHound expects to announce a potential transaction next quarter, Moore said. In fact, the chief executive expects both CoverHound and CyberPolicy could see higher valuations in light of the global pandemic. Moore is looking to connect with multiple advisers since expertise in the insurance and cybersecurity industries rarely overlaps. He is also looking for a team with understanding of small businesses and software-as-a-service companies. CoverHound could prove especially attractive to large insurance brokers now that social distancing and mandated work-from-home policies are limiting their business, Moore said. With more people online, cyber threats are going to become more prevalent, he added. CoverHound is profitable; CyberPolicy does not yet operate in the black, but it is “a few partnerships away” from hitting profitability, he added.Although it could sell to a current investor, Moore thinks the upside would be larger for another type of buyer. The top 20 largest insurance brokers and agencies cannot efficiently sell the very small annual premiums, which is where CoverHound can provide greater efficiency, he said. If CoverHound decides not to sell, an initial public offering could be on the table in 2021, when it will be “well past” its break-even point, Moore said. Although he believes the public markets have historically been good to the insurance world, he views CoverHound as a much better fit inside a large insurance broker due to synergies.

Gabi Personal Insurance Agency(3/9/2020)

Gabi Personal Insurance Agency has received preliminary inbound acquisition inquiries after its recent USD 27m Series B fundraising, said Hanno Fichtner, CEO and co-founder. However, an exit maybe three to five years away, he said. The San Francisco-based online insurance broker is not looking for an equity raise in the near term but would consider a USD 10m debt raise to expand sales, Fichtner said. Gabi's recurring predictable revenue stream makes it “very easy” to raise venture debt, he said. Logical buyers of Gabi could include public insurance brokers such as Brown & Brown [NYSE:BRO] and Aon [NYSE:AON] as well as large fintech firms, the CEO said. Most large insurance brokers are heavily focused on the more profitable commercial line insurance, but Gabi’s automation expertise in personal line insurance could create attractive order flow for one of these players.

The Zebra(2/9/2020)

The Zebra, an Austin, Texas-based insurance comparison site, expects to double revenue in 2020 and could reach profitability in 2021, said CEO Keith Melnick. The Zebra will consider growth options when reaching USD 100m revenue in 2021, Melnick said. The startup saw close to USD 37m in revenue in 2019, up 200% from 2018. In January, it posted about USD 4.8m in revenue, also a 200% increase year over year, Melnick said. The Zebra could pursue additional funding, should Melnick believe that more money would enable it to fuel growth faster or pursue an acquisition. If he seeks funding, Melnick would first go back to existing investors. The executive is also open to looking for new investors or possibly turning to the public markets. If The Zebra were to be acquired, the chief executive would want to continue running it as an independent company, similar to KAYAK’s trajectory under Priceline. However, Melnick is “not worried” about exit opportunities and said there has been no pressure from investors to seek liquidity options.

Corvus Insurance(2/6/2020)

Corvus Insurance, an insurance company that uses data-driven underwriting technology, is looking at acquisitions to add data analytics skills, said Phil Edmundson, CEO and founder.The Boston-based startup wants to buy firms and teams that use new data sources, including sensors, satellite, social media and mobile phones, to manage risk in commercial insurance, said Edmundson. He said he doesn’t have a preference for a target’s size or region, but sees more insurance technology activities in New York, San Francisco and Chicago. The goal is to consolidate young insurtech firms that have tech skills but lack sources, leverage Corvus’ nationwide distribution relationships with commercial insurance brokers, and expand new insurance products in cyber, property, cargo, employment practices’ liability and directors’ and officers’ liability, Edmundson said. He declined to comment on whether it is in talks with any targets. While Corvus has received inbound inquiries from potential investors, it is not actively looking for a capital raise in the near term, Edmundson said.

Kin Insurance(1/28)

Kin Insurance, a Chicago-based online homeowner insurance company, expects to raise over USD 25m in a new equity financing round by the end of the first quarter, said CEO Sean Harper. The capital raise plan comes as Kin is building out its underwriting capability, a major pivot since its inception in 2016 originally as a virtual agency, Harper said. It received the approval from the State Department of Insurance in Florida in July 2019 to operate as an underwriter through its division Kin Interinsurance Network, a reciprocal insurance exchange owned by the policyholders, he said. With the new funding, Kin expects to become cash flow positive by late 2021, Harper said. It currently has about 110 employees in Chicago and St. Petersburg, Florida, and plans to have around 150 by end of this year, he added. Kin has been approached by insurance companies, but it decided against being acquired, Harper said. The technology of the incumbent players is essentially different from Kin’s infrastructure, and Kin would like to continue strengthening its branding and retaining the customer relationship, he explained. Kin prefers the IPO track if it were to consider an exit down the road, he added.

Bold Penguin(1/9/2020)

Bold Penguin, a privately held insuretech business founded in 2016, could raise additional funds but has no immediate plans to do so, said co-founder and CEO Ilya Bodner.Columbus, Ohio-based Bold Penguin has raised slightly more than USD 50m to date, having completed a USD 32m Series B in September 2019. Participants in the round included growth equity firms Hudson Structured Capital Management Ltd., Lightstone, Guggenheim Partners, Lockton, existing investors and individuals from Stone Point Capital, according to a release. “Some sort of capital event is certainly in our future,” said Bodner, who declined to provide a timeline. In 2019, Bodner told Columbus CEO magazine that he expects to sell the business at some point. “Our idea is to build something that’s stable, solid, trustworthy, that eventually one of these big companies buys,” he said in reference to a large insurance or technology company.

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