The current blip on the investment numbers aside, Insurtech as a vertical does not attract its fair share of funding.
Australia is ranked 5th (out of 137 countries) on the Global Entrepreneurial Index, and one of our strongest attributes is Risk Capital¹.
Yet insurtech founders do not receive proportionate funding compared with other start-up verticals like Agri-food Tech and Edtech.
In this piece, we explore why this is, and consider what can be done about it. First, let us take a look at some exciting early-stage insurtech investments that closed through June¹.
Jooycar (LATAM)
$700k (USD).
Jooycar is ‘the leading Connected Car and Insurtech platform in Latin America’. Their telematic based technology leverages real-time big data sourced from cars to deliver enhanced end-user services (B2C) and create new business opportunities for insurance and automotive industry (B2B).
Brightside (US)
$35.1m (USD) Series A
Brightside is the first employer-based financial wellness solution that uniquely combines personal assistants, smart technology and innovative products to relieve employee stress and its impact on the workforce.
Monk.ai (EU)
€2.1m Seed
Monk.ai leverage computer vision and deep learning to monitor, detect and assess item’s condition based on videos. Currently working with leading European players, in the insurance & mobility industry.
Inclusivity Solutions (SA)
$1.3m Series A
Inclusivity Solutions are experts in creating inclusive digital insurance markets. They apply global experience and best practice to help mobile operators, insurers and other partners deliver sustainable insurance solutions for emerging consumers.
Source: Crunchbase ²CB Insights
Yes, insurtech investment hit a record high of $6.35bn USD, across 314 deals through 2019. Yes, that is a 52% increase on 2018. Relative to prior insurtech funding performance, the numbers are looking great.
Relative to other verticals however, the numbers tell a different story.
Our record year, 2019 attracting $6.35bn of investment is quite modest compared to other verticals. The same year, Edtech attracted $18.66bn and Agri-food tech attracted $19.8bn.
What explains the funding shortage?
Maybe their industries are comparatively larger? This is not the case. As a % of industry size, Edtech and Agri-Food tech each represent double the funding of insurtech.
Market maturity is a factor. This has been in part driven by the complexity of the value chain and the products, which has kept many non-insurance founders and VCs away. There are other significant barriers to insurance market entry, including regulation and partnering requirements. It is no wonder insurance is commonly referred to as the ‘final frontier’ for startup founders.
What can be done about it?
Gateway is forming a Working Group via the local NFP peak body Insurtech Australia and partnering with some key industry stakeholders to engage local VCs and CVCs. It is thought that companies like Gateway and other specialist insurtech investors can help de-risk insurtech investments by exposing VCs and CVCs to insurtechs early in their lifecycle.
It is also worth noting that an uplift in capital flow into the insurtech vertical requires a sustained flow of high calibre founders. As such, we encourage the local ecosystem to continue building a pro-innovation environment and offering services that remove barriers to entry and make insurtech an attractive vertical. A simplified market entry helps attract great quality founders, who bring fresh thinking and successful applications from adjacent industries.
We encourage any CVCs and VCs to reach out to start engaging, otherwise we will be in touch soon.
Simon O’Dell
+61 401 100 606
simon@insurtechgateway.com.au