Insure-Pro
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Overview
Insurtech - Acquisitions & Closures
Introduction
600 Insurtechs - 13 Closures - 51 Acquisitions
Following our recent article on the Top 100 Insurtechs by Mention we thought it would be interesting to look at the number of acquisitions and closures that have taken place within the Insure-Pro 600 Dataset.
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Before diving into the data, it is worth looking at the various statistics on start-ups which, put simply, state that 90% of start-ups fail within the first 10 years. Venture backed start-ups perform better with a failure rate ranging from 60-75%, dependent on which expert & report you want to believe. Failure is often linked to misalignment of the proposition based on current market needs as the number one reason (42%), followed by running out of cash (29%) and not having the right team (23%).
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The National Venture Capital Association use a three-tier approach to assess start-up success:
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Start-ups that fail altogether,
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Those that return their original investment
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Those that manage to meet and exceed investor hurdles
Their statistics still show a 70% fallout rate. Investors typically target early-stage start-ups with the goal of exiting at the 5–10-year point via acquisition or IPO.
CBI Insights review of closure rates reported an estimated 70% failure rate for technology company start-ups, which occurred 20 months into operations with circa $1.3m in raised capital. Willis Towers Watson research last year estimated 184 Insurtechs had closed in the 2017-2020 period. So, it’s a tough market and even if you have the proposition spot on, there are many obstacles still to overcome.
OVerview
During 2020 - 25 were acquired and 7 closed their operations. As shown in Exhibit A, this is considerably more than the previous decade combined. We expect this theme to continue into 2021 as the recession continues to bite.
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Driving the change, of course, is both sides of the effects of COVID-19. Firstly, with start-ups seeing an average revenue decline of 32% due to the worldwide recession and, secondly, less appetite by investors to fund growth of often small scale Insurtechs. One widely reported statistic in circulation is that 40% of start-ups, in mid-2020, were in the red zone with less than 3 months of cash available.
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So, it really is a buyer’s market for well-funded companies looking for acquisitions to enhance their digital propositions - and this is just what we have seen:
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Brown & Brown acquired CoverHound to help them grow in the digital SME and personal lines space.
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Sprout purchased Vivametrica to enhance its Wellness Solutions.
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Direct Line purchased Brolly to augment its digital proposition to the market.
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Aon acquired CoverWallet, enhancing its data & analytics capabilities and SME proposition.
Boundlss – Its aim was to encourage healthier lifestyles working in partnership with insurers. Founded in 2015, Australian based, Boundlss launched an AI Based platform that collated and analysed data from wearable devices with the goal to provide consumer guidance on healthier lifestyles, using Lloyd, its AI health robo-coach. Numerous market recognitions - Singapore StartupBootCamp Participant, 2016 Insurtech Start-up of the Year Australian Fintech Awards, Hartford Insurtech Accelerator. A quiet departure from our radar.
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Go Bear – Its aim was to become a financial supermarket in Asia, with ease and simplicity at its core. Headquartered in Singapore, GoBear started operations in 2015 with a comparison website targeted at South East Asian markets. It raised $80m in 2019 and then in May 2020 it raised a further $17m. The reason given for closure – unable to raise further funds and the challenges of Covid-19 resulting in reduced demand for specific products such as travel insurance. This shows the difficulty in running profitable operations in product lines with razor thin margins and demonstrates just how quickly a start-up can burn through capital. Large funding rounds are not a direct correlation of success.
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Buzzvault -Its aim was to address the under-insurance in the UK home insurance market. Founded in 2013, UK based, and backed by Munich Re Digital Partners, Buzzvault designed a home insurance offering augmented with a blockchain based ‘contents inventory’ of all your possessions. It appeared in the Disrupt 100, Tech Insider 11 start-ups to watch, shortlist for DIA Awards, Part of StartUpBootCamp, Tech World 15 Insurtechs to Watch.
Operations closed in 2020 as the latest round of funding failed due to Covid-19. However, there is potential to sell the brand and technology assets.
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InsurePro Database - Acquisition & Closure DataSet
IN MEMoriam
Dataset
Data Analysis - Acquisitions & Closures
Turning to the data, our findings were as follows:​
Across the 64 Insurtechs that we identified the average age of acquisition was 7.5 years and the average age of those that closed was circa 5.1 years. Specifically, our closure numbers do not fit the statistics cited earlier, probably due to our decision to focus on later-stage Insurtech's that have already come to the notice of the media.
Data Analysis - In-Memoriam 2020
2021 Exits & Opportunities
2021 will undoubtedly be a difficult year for the Insurance Industry, but despite market conditions, each day witnesses more 'Chief Digital' roles advertised on LinkedIn and more Insurers announcing that they are ‘open’ for ‘digital’ business –
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Beazley has set up a new digital business unit.
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Former Aviva boss, Mark Wilson, has announced the launch of a new Insurtech focused on the UK motor insurance market.
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Chubb has launched a digital team focused on Europe to expand its digital solutions.
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Moving forward, investment dollars will continue to chase those propositions that are clearly aligned to insurer pain points even in this tougher operating environment.
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Outlook
Data Analysis
Title | Status | Acquired By | When | Age | Region |
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Cover Wallet | Acquired | Aon | 07/01/2020 | 5 | North America |
PolicyPal | Acquired | AMTD | 17/03/2020 | 4 | Asia |
Keylane | Acquired | Waterland Private Equity | 01/01/2012 | 0 | Europe |
Bold Penguin | Acquired | American Family Insurance | 23/01/2021 | 5 | North America |
CoverHound | Acquired | Brown & Brown | 09/11/2020 | 10 | North America |
One Inc | Acquired | Great Hill Partners | 20/02/2020 | 8 | North America |
RGI | Acquired | Corsair Capital | 09/01/2018 | 31 | Europe |
RiskGenius | Acquired | Bold Penguin | 06/10/2020 | 9 | North America |
AcceptEasy | Acquired | Serrala | 25/02/2020 | 14 | North America |
Actineo | Acquired | Riverside Company | 29/05/2019 | 10 | Europe |
Go Bear | Shutdown | 06/01/2021 | 7 | Asia | |
C-bien | Shutdown | 01/06/2019 | 6 | Europe | |
Goji | Acquired | Seeman Holtz Property & Casualty | 13/11/2018 | 11 | North America |
Grohe | Acquired | Lixil Group Corp | 25/09/2013 | 77 | Europe |
Valen Analytics | Acquired | Insurity | 26/01/2017 | 15 | North America |
Namirial | Acquired | Ambienta | 07/05/2020 | 19 | Europe |
Xurux | Shutdown | 01/06/2020 | 6 | Europe | |
Personiq | Shutdown | 01/01/2020 | Europe | ||
Wellthie | Shutdown | 01/10/2020 | 7 | North America | |
SSP Limited | Acquired | LDC | 16/03/2015 | 13 | Europe |