As fundraising activity in the global InsurTech sector continues to rebound from its brief COVID-19 related slowdown a year ago, global investment in the sector reached a new quarterly high of US$2.55 billion during the first quarter of 2021.
The number of mega-rounds reached eight, more than any other three-month period, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.
Total funding during the quarter grew by 180% when compared with Q1 2020, which suffered a deep decline due to fears surrounding COVID-19. The latest total grew by 22% relative to more comparable Q4 2020, while the number of discrete deals soared 42% higher than during the previous quarter. Investment was driven primarily by P&C focused companies, which represented 69% of deal share.
Eight companies accounted for more than $1.13 billion in funding during the quarter, 44% of the total raised. That marks a new quarterly high for the number of mega-round fundraisings of $100 million or more. Next Insurance, Coalition, Zego, Sidecar Health, Pie Insurance, Clarify Health, Corvus Insurance Agency, and TypTap all raised sums equal to or greater than the threshold, propelling Coalition and Zego to billion-plus “unicorn” status.
Alongside the unicorn-making rounds was a 13 percentage-point increase in early-stage deals compared to Q4 2020. 60% of investments in Q1 2021 were Series A or B fundraisings. The global footprint of InsurTech also increased during what was the most geographically diverse set of early-stage start-ups in a single quarter, representing 24 countries including Bangladesh, Estonia, Brazil, Nigeria, and U.A.E.
Dr. Andrew Johnston, global head of InsurTech at Willis Re, said: “The record level of activity this quarter reflects our industry’s ever more widespread willingness to engage and adopt technology, which continues to grow at an unprecedented rate. Technological innovation gains ground only when a community emerges to support it, and COVID-19, more than any other factor, has rapidly accelerated the change that was already well under way. COVID-19 has helped strengthen the narrative, and demonstrably illustrate the results technology can deliver, which are now being achieved at scale.
“That said, the solutions offered by InsurTechs must make intellectual and commercial sense to their target users, whether they’re insurers, brokers, or insurance buyers. For them, the technology itself is the least interesting part of the initiatives. Unfortunately, a failure to understand these realities, in addition to the general difficulty of entering our industry as a nascent business, means that many InsurTechs will most likely never achieve the grandeur of their aspirations.”