The Top InsurTech Ventures by Capital Raised

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InsurTech is in it’s Cambrian explosion phase with lots of funding action. So we thought it was time for a snapshot.

The amount of capital raised is only one predictor of success. The startup world is full of klunkers that raised a huge amount and bootstrappers who created $ billions in value. In this list alone, Zenefits is clearly having a lot of trouble having raised half a big one.

Nevertheless, the amount of capital raised is a reasonable proxy of value based on the wisdom of a savvy crowd (VCs).

Thanks to all who contributed to this research, here is an updated list:

Venture Region $ Segment 1
Zhong An Asia 900 Full Stack
Oscar America 727.5 Health
Zenefits America 583 Lead Engine
Metromile America 205 Auto
Accolade America 163.34 Health
Collective Health America 125 Health
Bright Health America 80 Health
Lemonade America 60 P2P
Trov America 46.27 Product Insurance
Cyence America 40
FinanceFox Europe 33.5 Misc
Justworks America 33 Lead Engine
Simplesurance Europe 33 Product Insurance
Huize Insurance Asia 31 Lead Engine
namely America 30 lead Engine
CXA Asia 25 Health
PolicyGenius america 21 consumer
Knip Europe 18.3 Robo Agent
Finanzchef24 europe 17 SME
Friendsurance Europe 15.3 P2P
Praedicat Europe 12 Catastrophe
QuanTemplate Europe 10.25 Tech
Bought By Many Europe 9.14 P2P

Takeways

  • America still leads by number of ventures and total $ raised.
  • Asia leads by the most raised by a single venture.
  • Health Insurance is the big driver in America

If I have missed any that should be on that list ie have raised more than the $9.14m, please tell us in comments and we will correct.

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CXA Group $25 million Series B shows the maturing of InsurTech and future of Innovation Capital

 

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Closing a Series A round is tough (the “Series A Crunch”), but closing a Series B is even tougher. You have to show great metrics at all levels. Series B is the “show me round”.

So when we see a big Series B round in the white hot InsurTech sector we pay attention.

In this post we look at the trends and insights behind the news that a Singapore-based health InsurTech venture called CXA Group has closed a $25 million Series B round from Facebook’s co-founder Eduardo Saverin’s B Capital Group and Singapore’s EDBI.

This news illustrates 6 major themes:

– Innovation Capital goes where it feels welcome

– Innovation capital goes where there is opportunity and that is shifting to Asia

– Singapore just scored a goal in the Fintech Hubs Global Tournament.

– The UHNWI Super Angels will shake up the “permanent aristocracy” of top tier VC Funds.

– The role of Government in building Fintech hubs

– This could be Zenefits done right

Note on terminology: we refer to Innovation Capital as the combination of cash + connections + know how that has historically been called Venture Capital. For reasons explained later, the historical term – Venture Capital – has outlived its Sell By Date.

Innovation capital goes where it feels welcome

This is not complex. Countries with zero capital gains tax on long term investments will attract a lot of Ultra High Net Worth Individuals (UHNWI aka Family Offices). Eduardo Saverin is an example – a Brazilian who famously renounced his US Citizenship in 2011 to take up residence in Singapore.

What is new is the blurring of lines between these UHNWI Super Angels and traditional Institutional Venture Capital. More on that later.

Innovation capital goes where there is opportunity and that is shifting to Asia

Asia is the 21st century growth story.

This statement wins the “Captain Obvious Award”. What is interesting is the time lag between when the growth shifts and when the innovation capital shifts. For a while, Innovation Capital in the middle aged world (America) and the old world (Europe) knew how to invest and saw the growth shifting to Asia. It was American VC money flowing into Asia. The next iteration, happening now, is when Asian VC money flows into Asia. This deal illustrates that shift.

Singapore just scored a goal in the Fintech Hubs Tournament.

This deal demonstrates that Singapore is becoming a major Fintech Hub, leveraging smart regulation and its position at the heart of the Asia growth story.

The UHNWI Super Angels will shake up the permanent aristocracy of top tier VC Funds.

The lead investor is credited as “Eduardo Saverin’s B Capital Group”. If the PR said “Eduardo Saverin” then this would be classed as an Angel round. Whether B Capital Group has other investors is not that important because a single UHNWI individual or family has plenty of capital to deploy.

For a long time, we had Angels who led the way by investing early and then politely inviting the big funds to invest. This led to what the Ivey Business Journal describes as a permanent aristocracy of top tier funds.  The Super Angels with an institutional fund, such as Eduardo Saverin’s B Capital Group can give that permanent aristocracy a run for their money. Some of the partners of those top tier funds are now also setting up as Super Angels and just investing their own money. Like Hedge Funds that become Family Offices, they no longer manage other people’s money, they just invest their own money. This is partly driven by tax, as people see the political writing on the wall that signals the end of carried interest fees being taxed as capital gains.

This is why we see the term Venture Capital as past its sell by date and prefer the term Innovation Capital. What we normally think of us VC – funding early stage innovation – is being done by Angels and too many VC Funds have become part of the asset management industry  focussed on AUM fees and short term exits.

The role of Government in building Fintech hubs

Co-Lead on the deal was the corporate investment arm of the Singapore Economic Development Board call EDBI. This post looks at the increased role of governments in Fintech regulatory competition as governments calculate the economic return on innovation. Whether direct investment (“picking winners”) is the right way is debatable, but expect to see more government activity in Fintech.

This could be Zenefits done right

CXA is going after the employee benefits industry (pegged at $100 billion in Asia) with a free SaaS platform monetized via lead generation. If that sounds familiar, think Zenefits, the hyper-growth success that hit the speed buffer (for reasons described here).

CXA goes to the next level by helping employers unlock wellness through prevention and disease management.

The health InsurTech opportunity is no longer only about America.

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Why did Allianz invest in Berlin InsurTech startup Simplesurance?

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According to leading VC and daily blogger since blogging began – Fred Wilson:

“There are two kinds of corporate investments in startups; passive corporate VC arms and active strategic investments.

The former is made by well established investment groups like Google Ventures, Intel Ventures, SAP Ventures, Comcast Ventures, and many many more. For the most part, they don’t “suck”. They can be a good source of capital for your company, they can be supportive investors who follow on when the rest of the syndicate does, and they generally have good reputations, including with me.

The latter is when a company sees a business they want to get closer to, they take a big stake, a board seat, and they make a ton of promises about how much they are going to help the company. These type of investments and relationships have almost universally “sucked” for our portfolio companies. The corporate strategic investor’s objectives are generally at odds with the objectives of the entrepreneur, the company, and the financial investors. I strongly advise against entering into these kinds of relationships.”

Which prompts the question, why did Allianz, Germany’s largest insurance group, buy a minority stake in Berlin based startup Simplesurance? In other words, will this be a good experience for the founders of Simplesurance and the shareholders of Allianz? Lets read between the PR lines to find out.

Simplesurance is a “we bring you lunch” startup

We categorize Fintech startups as we eat your lunch or bring your lunch:

A. We eat your lunch. They take business away from Incumbents. For example, Market Place Lenders and Robo Advisers. Note: they can also do cooperative deals with incumbents, but the startup usually owns the customer relationship and that makes it a fundamentally different deal. Quite often the startup first gets traction in a market that the Incumbent does not care about but eventually there is a market share battle.

B.  We bring you lunch. This describes both Traditional Fintech as well as ventures building B2B2C revenue share partnerships with  Incumbents. 

It makes no sense for an active strategic VC to invest in a eat your lunch type of startup. They should leave that to purely financial VC. There is no strategic alignement possible between Corporate VC and an eat your lunch startup.

So far so good. Simplesurance is clearly a bring you lunch type of startup. Their  software enables a customer to buy insurance products online. That is technology that an incumbent can use. 

That puts Simplesurance in the category that we call Robo Brokers.

The PR makes it clear that Simplesurance will not only sell Allianz products, so they can act in the customer’s best interest.

Allianz is huge, with operating income over  EUR 10 billion. This deal is a rounding error for them. It is a cheap way to get a front seat at the Creative Destruction 7 Act Play and the right to go back stage and talk to the actors. They get to see how to attract customers online and figure out how to apply that at scale.

Allianz will probably buy Simplesurance at some future date. 

How Allianz figure out the cannibalization challenge with their existing agents remains to be seen. No amount of digital tech can make that problem go away.

The other game play for Allianz can be be to use Simplesurance as a digital only entry to new high growth markets. The PR mentions India as a country and that makes sense as it is mostly a blue ocean market for Insurance.

Allianz is not alone. Incumbent insurers such as Munich Re and Axa have also been active in Corporate VC.  Munich Re is taking the indirect route by investing in a Berlin-based Fintech incubator called Finleap.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.