What a difference a year can make. A venture capitalist’s prediction that “the age of the European insurtech IPO will soon be upon us” was reported by TechCrunch in April 2021. The viewpoint was reasonable at the time. Since this column investigated the insurance technology startup market’s lightning-quick financing just last June, it may be said that “insurtech is hot on both sides of the Atlantic.” Foxx had just closed a $650 million round at the time, which was a significant win for European insurtech.
Since then, the technology sector has stabilized and public-market investors have rejected the insurtech IPOs from late 2020 and early 2021, effectively repricing the worth of neoinsurance businesses to almost nothing if we exclude cash from their market values. The Exchange asked which insurtech businesses would succeed this year and which might fail in February as a result of the shift in perception. Since then, tech companies have continued to drop, losing value on the Nasdaq and NYSE, including the most recent insurtech IPOs.
We are now analyzing how the industry has changed since around a year ago when it appeared like a period of hyperactivity would propel a number of European insurtechs to the public markets. We now understand a lot more thanks to venturing funding data gathered for TechCrunch by PitchBook and remarks from active insurtech venture capitalist Florian Graillot of Astorya.vc. Even if the 2022 data paints a somber picture, the remainder of Q2 might be crucial for insurtech this year. Investigate insurtech activities in both North America and Europe, contrast current outcomes, and consider potential future developments.
How this year’s insurtech investments have changed, the data that we can now see with the advantage of hindsight aligns perfectly with the optimism around insurtech outcomes from the previous year. According to PitchBook, insurtech venture capital activity increased in North America from $1.67 billion across 78 deals in Q1 2021 to $2.21 billion across 83 rounds in the second quarter.
Prior to declining to $1.80 billion in the fourth quarter of 2021 and to $1.52 billion in the first quarter of 2022, it reached its peak in Q3 2021 with $2.51 billion invested in 66 projects. In the first quarter of 2022, there were just 54 deals, down from 67 in the fourth quarter of 2021. The insurtech story has been a little bit different in Europe. According to PitchBook, with the exception of the second quarter of last year, investment has been relatively stable from Q1 2021 through the first quarter of 2022.
With the exception of Q2 2021, investments in European insurtech tended to fluctuate between $450 million and $550 million from the beginning of the previous year to the first quarter of 2022. However, in Q2 2021, $1.76 billion was invested over 57 rounds, marking a record for both deals and dollars in the recent past. More in a moment on why Q2 2021 is crucial to comprehending the future of insurtech in Europe.
