Despite the shutdown period due to the new coronavirus pandemic, the insurtech world continues to appeal to investors and put up record figures. That’s according to the latest report released by consulting firm Willis Tower Watson, which analyzes the overall performance of the industry during the first three quarters of this year.
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insurtech 2021, the figures of the first three quarters
Globally, from January to September 2021, insurtech companies raised $10.5 billion in 421 investment rounds, a number well above the 377 closed in the whole of 2020. It’s also just $12 million short of the total amount collected by the industry in 2018 and 2019 combined.
Specifically, $3.1 billion was raised in the quarter just ended: 23% more than the same period in 2020, but 35% less than the previous quarter. Moreover, out of 113 total rounds – more than 30% of which were Series A rounds – 11 were “mega-rounds” of more than $100 million, which accounted for more than half of the total funds raised.
Two of the three largest rounds were closed by companies operating in the cyber space: Coalition, which raised $205 million in late September and reached a $3.5 billion valuation; and At-Bay, which raised $185 million in July with a Series D round.
46% of the companies that have benefited from new liquidity are American, but the insurtech wave is also rapidly reaching countries located in other geographic areas, such as Sweden, South Africa, the UAE or Southeast Asia.
Investments not for everyone: 50% are megarounds
As Andrew Johnston, Global Head of InsurTech for Willis Re, pointed out, “the steady increase in the sector does not mean that venture capital funds are available to most, or even just many, of the companies operating in the field.” Indeed, the main trend is moving toward an increasing concentration of investment in favor of a smaller circle of companies with established positioning.
In the second quarter of 2021, for example, more than two-thirds of funds raised were concentrated in 15 deals. As a result, 0.5% of globally operating insurtech companies shared $3.3 billion, an additional $1.5 billion was distributed to 147 other companies, but 95% of operating insurtech startups received no funding.
In addition, analyzing data from recent years Willis Tower Watson calculated that, on average, 50% of the funds received by the insurtech sector are part of mega-rounds. This is partially related to the increasingly common habit for large companies to launch major investment rounds just before entering the financial markets, with the aim of improving their valuation and achieving unicorn status.
Indeed, the number of new unicorns is steadily increasing: in 2018, there were four startups that reached a valuation of $1 billion or more, five in 2019 and 2020, and an impressive eight in 2021. Willis Tower Watson roughly puts the number of operating insurtech unicorns at 24 now.
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