#302
Assurance
In the past few years, several high-flying consumer insurance startups have achieved multi-billion-dollar valuations. However, these companies have had to raise exorbitant amounts of capital to get there.
Oscar (valued at nearly $4b), has raised $1.3b in the process. Lemonade (valued at $2.1b) has raised about $480m. Unicorns Clover Health and Hippo have raised $925m and $209m respectively.
This week we learned that a three-year-old startup called Assurance IQ successfully broke the mold. The company reached an agreement with Prudential to be acquired for $2.35b, with an earnout that could bring the total to $3.5b.
There is no record of Assurance having raised any venture capital – and the press release notes that Assurance IQ is profitable.
Why is it surprising that a D2C insuretech could be so capital efficient? Customer acquisition for insurance is highly competitive and expensive, with Geico alone having spent $1.4b on advertising in 2017. Insurance products also have little virality, so insurance companies have to pay for most of their customers. Additionally, customer engagement is often low, and there are few times in life when insurance is top of mind.
These dynamics make the Assurance IQ story remarkable. While the “secret sauce” remains a secret, the company has clearly succeeded with a combination of elegant user experience and data science to funnel insurance seekers into attractive products.
So to the Assurance IQ team – we salute you!
Portfolio News
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Assurance
Prudential to Pay $2.35 Billion for Online Startup Assurance IQ - Assurance IQ is being acquired for $2.35b upfront, with an earnout that could bring the total purchase price to $3.5b. In contrast to other high-flying direct to consumer insuretech startups, there is no record of Assurance having raised venture capital. Read more
Industry News
Zillow/US housing: flipping out - In the US, mortgage refinance applications have reached the highest level in three years. If the knock-on effect is a rise in home sales it will be a boon for online platform Zillow as the US group aims for multiple revenue streams from each property purchase. Read more
The Series A landscape in EU 2014-18 - fundraising benchmarks for founders of early-stage companies - A very helpful deck from DealRoom and LocalGlobe that will help founders target VCs who are historically more likely to consider leading a Series A in a particular geography, round size and category. Read more
He’s not Satoshi, he’s a very naughty boy - Another fun read from the FT's Alphaville team into the current Craigtoshi saga (the Australian former pastor and polymath who claims to be bitcoin creator Satoshi Nakamoto). "It seems like the life of Craigtoshi has the makings of a West End musical one day. Or at least a Netflix series. Read more
China’s fintech approach becomes clearer with its 3-year plan- The essence of the plan, lies in the Chinese regulators goal to increase the “controllability” of fintech in China while also strengthening risk prevention. The PBoC, they say, wants to put itself in a position where it can adequately supervise fintech developments. Read more
Here’s who owns the most land in America - Bloomberg's interactive map explore the 100 largest private landowners in the U.S. who own 40 million acres—an area the size of Florida. Read more
European banks join to build cross-border mobile payment network - Seven providers of mobile payment services owned in large part by European banks are building a pan-European network, as they seek to counter the growing competition from fintechs and global technology giants like Apple Inc. Read more
The Big Short’s Michael Burry explains why index funds are like subprime CDOs - One of his most provocative views in a recent Bloomberg interview is that the recent flood of money into index funds has parallels with the pre-2008 bubble in collateralized debt obligations, the complex securities that almost destroyed the global financial system. Read more
Stripe launches Stripe Capital to make instant loan offers to customers on its platform - Stripe has announced it's getting into small business lending with loans underwritten by payments on Stripe. The company promises lower friction, with no application necessary and automatic loan payback out of future sales. Read more
Bitcoin surpasses $10,700 as VanEck Starts offering “limited” Bitcoin ETF to institutions - The ETF shares have been offered via Rule 144A and will provide institutional investors access to a physically-backed Bitcoin ETF product that is tradeable through traditional and prime brokerage accounts. The main goal is to show to the regulatory agency in the US that the market is ready to deal with a Bitcoin-based ETF. Read more
Select Financings
BigID - NYC and Israel based GDPR and privacy compliance platform has raised a $50m Series C led by Bessemer Venture Partners. Read more
Credit Sesame - California based credit management platform has raised $43m of Series E capital led by ATW Investors. Read more
DappRadar - Lithuania based platform tracker of the use of decentralized applications has raised $2.3m in Seed funding led by Naspers. Read more
Even Financial - New York based digital connector for credit card and personal loans has raised $25m of Series B capital in a strategic round led by Citi Ventures and MassMutual Ventures. Read more
Happy Money - California based lending marketplace raised $70m of Series D capital led by CMFG Ventures (the venture arm of CUNA Mutual Group). The valuation on the round was $495m. Read more
Railsbank - London based open banking API and infrastructure has raised $10m Series A capital led by Moneta Capital, with participation from CreditEase, ClockTower, and Singapore Life. Read more
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