Lemonade nailed down $34 million in new venture financing, a crucial, second round of financing as the peer-to-peer InsurTech startup focuses on expanding and growing sales of its renters and homeowners insurance.
General Catalyst led the Series B round, with participation from GV (the new name for Google Ventures), Thrive Capital and Tusk Ventures. Existing investors XL Innovate (the investment arm of XL Catlin), Aleph and Sequoia also participated.
The investment comes less than a year after Lemonade announced its seed round and less than two months after it began doing business in in New York. Lemonade was licensed as an insurance carrier in New York on September 15, 2016 and said it has filed for a license in California. The company plans to expand in 2017.
In an unusual move, Lemonade revealed its early numbers in September after its New York opening, in a message from co-founder Shai Wininger. The startup said it sold 142 policies and generated $14,300 in gross written premium in its first 48 hours.
“We believe in replacing brokers and paperwork with bots and machine learning, and we now have the backing to unleash this formula across new products and geographies,” said Daniel Schreiber, co-founder and CEO at Lemonade, when announcing the new funding.
Lemonade uses software that automatically performs simple tasks, called bots, to deliver insurance through its app and at lemonade.com. Consumers also file claims with the bot, which is authorized to pay claims instantly and without human intervention, creating what Lemonade’s founders say is a “delightful” insurance experience for customers.
Unlike traditional insurance companies, Lemonade takes a flat fee and gives back unclaimed money to causes policyholders care about. Lemonade’s “Giveback” program derives from studies by Lemonade’s Chief Behavioral Officer, Professor Dan Ariely, and has earned Lemonade a B-Corporation certification.
“Lemonade is revolutionizing insurance, transforming one of the largest and most outmoded industries into an enjoyable experience for consumers,” said Joel Cutler, managing director, General Catalyst and a Lemonade board member.
“We look for companies that have the potential to radically improve customer experience, and we saw that clearly in Lemonade. They are harnessing a compelling mix of behavioral economics, artificial intelligence and great design,” said Tom Hulme, GV General Partner in the announcement.