Insurance Tech Q3 2021

Although global insurtech funding has dropped 35% from the previous quarter’s record peak to $3.1B across 113 deals, insurtechs have raised a whopping $10.5B across 427 deals in 2021 so far. This funding figure is already 48% greater than 2020’s year-end total, and deals are also up 13%.

Q3’21 represents another strong quarter for insurtech. Mega-round count remained elevated at 11, while early-stage deal sizes saw a 90% quarter-over-quarter (QoQ) increase. And as cybersecurity continues to be a major challenge for businesses of all sizes, 2 of the top 3 largest deals this quarter went to startups building cyber insurance and risk management solutions.

Q3’21 Insurtech Highlights:

• Insurtech funding falls from its previous record high but remains elevated, raising $3.1B across 113 deals: Global insurtechs continued to see a strong trajectory in Q3. This quarter, global insurtech funding reached $3.1B. While this figure represents a 35% decrease from the prior quarter, it still represents a 23% increase from the same period last year and is notably the second-largest quarterly funding figure on record. After 2 consecutive quarters of deal growth, insurtech deal activity fell nearly 30% from Q2 to 113 deals. However, year-over-year (YoY), overall deal activity was up 9%, reflecting continued growth. This quarter, mega-round count remained elevated at 11 — furthermore, outsized deals accounted for roughly 51% of total funding, compared with nearly 70% in Q2. After reaching its lowest level since Q2’18 last quarter, the share of U.S.-domiciled companies rebounded to nearly 46%, an increase of roughly 7 points from Q2’21. Indonesia, Sweden, South Africa, Singapore, the U.A.E., and others all saw QoQ increases in deal activity as insurtech continues to scale across the globe.
• Early-stage average deal size grows to nearly $12M, up 90% compared to Q2’21: Early-stage startups raised a record-breaking $630M in Q3, even though deal count fell 39% QoQ to 57. Given this dynamic, average early-stage deal size grew to nearly $12M, up 90% QoQ and nearly 80% YoY. The mix of early-stage deals also saw a notable shift in Q3. Seed/angel round deal share fell dramatically, reaching its lowest point since Q2’20 at just 19% of overall deals, marking a 23-point decrease QoQ and a 12-point decrease YoY. Conversely, Series A rounds saw notable growth and accounted for 31% of all deal activity —reflecting a 15-point increase QoQ and a 6-point increase YoY.
• Cyber insurance-focused startups see 2 of the top 3 largest deals, as cybersecurity continues to be a major business challenge: Cybersecurity continues to be a major challenge for corporate executives and small businesses alike as the severity and frequency of cyberattacks both continue to grow. Of the 3 largest rounds this quarter, 2 went to startups focused on offering cyber insurance, including Coalition, which raised a $205M Series E, and At-Bay, which raised a $185M Series D. Companies deploy a variety of models to approach cyber insurance, including tech-enabled managing general agents (MGAs) for underwriting and risk analytics providers. Outside of the top 3 deals, Envelop Risk, which focuses on cyber underwriting services for (re)insurers, inked a sizeable $130M Series B, while even earlier in the funnel, BOXX Insurance and Y-Combinator-incubated Telivy raised funding to grow their solutions further.

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