InsurTech venture capital funding reached more than $2.5 billion in the first quarter – a new global high. But just eight companies accounted for close to half of the total, according to a new Willis Towers Watson report.

“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,” Andrew Johnston, global head of InsurTech at Willis Re, said in prepared remarks.

Johnson said COVID-19 has helped accelerate insurers’ turn to technology. At the same time, however, InsurTechs won’t go far unless their ideas are practical on both an intellectual and commercial level, he noted.

Willis Towers Watson’s Q1 tally of $2.55 million in global InsurTech fundraising for the 2021 first quarter included eight mega-rounds, which itself was more than any other three-month period, the company’s Quarterly InsurTech Briefing said.

Those eight-company mega-rounds raised a combined $1.13 billion during the quarter – 44 percent of the total, and Willis Towers Watson said this was a new quarterly high for the number of mega-round financings of $100 million or more.

Next Insurance, Coalition, Zego, Sidecar Health, Pie Insurance, Clarify Health, Corvus Insurance, and TypTap all raised sums equal to or greater than the threshold, Willis Towers Watson said – and those raises propelled Coalition and Zego to billion-plus “unicorn” status.

InsurTech startups’ Q1 fundraising reflected an astounding 180 percent increase from Q1 2020. That, quarter, however, was hobbled by a deep decline stemming from the looming coronavirus pandemic. When compared to the 2020 fourth quarter (which reflected a venture capital rebound), InsurTech financing in Q1 2021 grew by 22 percent, according to the report.

Other report findings:

  • P/C focused companies drove most of the investment, representing a 69 percent deal share.
  • WTW tracked a 13 percentage-point increase in early-stage deals compared to Q4 2020.
  • 60 percent 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 startups in a single quarter, representing 24 countries including Bangladesh, Estonia, Brazil, Nigeria, and U.A.E.

Source: Willis Towers Watson

Topics Mergers & Acquisitions InsurTech Tech Willis Towers Watson