there were two markets for insurtech startups in 2021: one welcoming and one dismissive. Private market investors poured capital into promising insurtech startups, while public markets reduced the value of newly public insurtech companies – and then even more as the year wore on.
The decline in the value of public insurtech unicorns has been a theme The Exchange has tackled over the past year, noting the mounting damage as valuations have plummeted from low to low. And yet when CB Insights crashed your 2021 fintech data collection, noted that global insurtech risk activity hit a new record for the year. In 2021, insurtech funding reached 566 deals (an all-time high and a 21% gain over 2020) and $15.4 billion in equity (again, an all-time high and a 90% gain over 2020). ).
Ploonge has discussed the growing gap between public and private technology valuations in recent weeks, as a lush venture capital market appeared to move away from a late-2021 decline in the value of many tech companies. Much of the losses persisted or worsened into early 2022.
And yet, the insurtech market is an even more extreme example of the decoupling we’re seeing more broadly in startup land. As well? Root, which raised $350 million from Series E in 2019 with a valuation of around $3.6 billion, by Crunchbase data, traded at $22.91 per share after going public. Today it’s worth $1.82 a share, or $460 million, about half the money it raised privately.
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Other examples are at hand. MetroMile was valued at $540 million during its last private round in 2018, by PitchBook data. The public debut of the SPAC-led company valued the company at around $1.3 billion. Today, after seeing its shares hit the $20 a share mark, MetroMile is worth $1.52 a share and awaits a new house inside Lemonade, another recent insurtech IPO. Lemonade saw its value drop from an all-time high of $171.56 a share to $28.92 this morning. The company went public at $29 a share.
For insurtech startups, the public market mess that some of their peers have suffered is bad news. Florian Graillotan early-stage investor in Europe putting capital to work in the insurtech space through Astorya.vc, told The Exchange that “there is a growing gap between the valuations of these startups and the M&A deals recently made in the insurance industry.” , citing the recent sale of Aviva France for $3.9 billion.
The company had by Reuters, “3 million customers and 7.8 billion euros in revenue”. (The deal was approved by regulators.) Multiples of less than one revenue don’t make founders’ hearts race. And there are startups in the business of writing insurance products for which such a low multiple would be akin to a death sentence from a valuation standpoint.
Falling stock prices for insurtech startups and worrying takeover prices from insurers can be a sticky wicket for the companies in the industry that have raised so much money in the past year. But that doesn’t mean all the news is bad.