So far in 2019, $3.97 billion has been raised across 205 VC deals in insurtech, excluding corporate VC transactions, exceeding 2018's $3.92 billion across 280 deals, per the PitchBook Platform. With nearly three months left this year, 2019 stands to potentially eclipse 2017's record-breaking $4.2 billion across 235 deals. By comparison, 2014 only raised $461.93 million from 82 VC deals.
Continuing the momentum, Next Insurance has completed a $250 million Series C from Munich Re at a valuation of more than $1 billion—nearly tripling the $350 million valuation it achieved after an $83 million Series B in July 2018. The round brings the Palo Alto-based company's total funding to $381 million in the three years since it was founded. It's also the second-largest deal of the year for Munich Re, behind Babylon Health's $550 million Series C, which the German reinsurer supported in August.
Founded in 2016, Next Insurance provides a variety of insurance solutions, including commercial auto and general liability insurance, via its online platform geared toward small business owners. It has been backed by investors such as American Express Ventures, Nationwide Ventures and Ribbit Capital.
The startup's new funding adds another mega-deal to the insurtech landscape. Recent nine-figure checks include online car insurance provider Root Insurance banking $350 million in August and online health insurance provider Oscar scoring a reported $375 million in August 2018. Both companies are said to hold valuations north of $3 billion.
Next Insurance's operations reflect the insurance industry's efforts to eliminate middle-man brokers and overhead expenses related to brick-and-mortar locations, while providing unconventional value-adds. For homeowners and renters insurance provider Lemonade—also exclusively internet-based—such benefits come in the form of its 90-second AI-powered enrollment process and its B-corp certification, which allows customers to donate the unclaimed money from their policy to a nonprofit of their choosing. The New York-based company raised $300 million with a $2.1 billion valuation in April.
In an interview with PitchBook, Next Insurance COO Sofya Pogreb explained that the business' value is based on a comprehensive approach to insurance and its clients.
"We are aiming for that one-stop shop, that full life cycle experience," Pogreb said, adding that the company's competitors tend to "just focus on distribution, or just focus on being great at a particular product."
International expansionWhile the US is notorious for its complexities and difficult-to-understand language surrounding insurance and legal processes, it may seem desirable for insurtech companies to operate in less challenging legal systems.
Lemonade, for example, entered Europe in June and was immediately able to offer Policy 2.0, a simplified contract that's intended for the average reader, as opposed to a legal professional. The company also reportedly gained authority to operate in 28 European countries by virtue of its registration with the Dutch Central Bank—a sharp contrast from the time-consuming requirement in the United States to become licensed in each state individually.
Despite the potential benefits of overseas expansion, Next Insurance is focused on staying put in the US for now.
"We believe there is a tremendous amount of growth opportunity left within the US," Pogreb said. In the $140 billion market, Pogreb continued, "there is a lot of work for us to still do."
Featured image courtesy of Next Insurance