Global InsurTech funding has surged by 37.6% in the first quarter of 2023, according to the latest Global InsurTech Report from Gallagher Re.
The report indicates that global investments reached $1.39 billion, a marked increase from the previous quarter, which saw the lowest total since Q1 2020. The deal count remained steady, but the average deal size increased by 25.3%, the global reinsurance broker said.
P&C InsurTech funding was the driving force behind the increase in quarterly investment, surging by more than 53% to $967.89 million. L&H fundraising also grew, rising 9.6% to $420.73 million. However, early-stage L&H funding saw a decline of 44.3% relative to the previous quarter. The majority of investments by (re)insurers went into early-stage rounds, a trend that has now been observed for six consecutive quarters.
Despite the overall positive trend, the report shows that 2023 may mark a return to the more ‘normal’ levels of gently rising InsurTech funding that were experienced before the pandemic. In contrast, 2021 saw 62% of investments through mega-rounds, compared to 41% in 2022. Mega-round funding accounted for only 12.9% of the total, the lowest since the dip experienced in Q1 2020.
Funding totals suggest that 2023 may mark a return to the more ‘normal’ levels
“2023 may be the beginning of a new era for InsurTech. 2021 undoubtedly marked the funding peak, fuelled by Covid-19 uncertainty and an organically occurring crescendo. The sector came back down to earth in 2022, leading to some serious restructures, cost-saving actions, and new business strategies. A lot of companies did not make it through,” said Dr Andrew Johnston, Global Head of InsurTech at Gallagher Re.
“Founders are now thinking about long-term sustainability and growth, and realizing their businesses will need to pull the plough themselves, reliant on their own capabilities and revenues,” Johnston added. He further highlighted that a significant upside seems to be the genuine willingness of many (re)insurers, brokers, and agents to adopt technology. The pressure is therefore on InsurTechs to make their businesses palatable and value-adding.
The report suggests that the majority of investments by (re)insurers are being made in early-stage rounds, which indicates a shift towards a more sustainable approach in the InsurTech sector. Despite early-stage L&H funding seeing a decline relative to the previous quarter, the average early-stage deal was up by 28% to $8.31 million.
The latest funding totals suggest that 2023 may mark a return to the more ‘normal’ levels of gently rising InsurTech funding that were experienced before the pandemic. This is in contrast to 2021, when 62% of investments were through mega-rounds, compared to 41% in 2022.
Top FIVE Insurtech Funding Rounds in Q1 2023
Novidea – US$50 million: A leading insurtech provider of a cloud-native, data-driven insurance management system, Novidea, and Insurtech Israel comapany, recently raised US$50 million in it’s Series C funding. The company, which supports more than 100 customers across 22 countries, and is led by CEO Roi Agababa, has experienced hyper-growth in recent years, selling to insurance leaders across the globe. Novidea plans to use the investment to continue its journey to becoming an industry leader and to increase international market share.
Nayms US$12 million: Nayms operates a public blockchain-based marketplace for insurance policies, and while the amount raised in the recent funding round was not disclosed, it is estimated to be around $3.5 million. Nayms has raised a total of $12 million in backing so far, with cumulative funding pegged at $8.4 million in mid-2021 according to Crunchbase. The funding round was led by UDHC, which is run by former senior members of the Maker Foundation, with participation from Tokentus and Keyrock.
Capitola US$15.6 million: Capitola Recently announced the successful completion of its Series A funding round, raising US$15.6 million. The funding was led by Munich Re Ventures and will primarily be utilised to enhance Capitola’s platform with a focus on market intelligence features and to expedite sales in the United States.
Kin US$109 million: Kin, a direct-to-consumer home insurance company, announced that it conducted a third close, an incremental $15 million, to its Series D round in the fourth quarter of 2022. The investment came from Geodesic Capital, QED Investors, and additional investors, bringing the total Series D funds raised to $109 million.
Cygnvs US$50 million: In January, the Los Altos, CA-based provider of a guided cyber crisis response platform, raised $55M in Series A funding. The round was led by Andreessen Horowitz, with participation from Stone Point Ventures and EOS Venture Partners. The company intends to use the funds to further enhance the platform while expanding sales operations.
