International startups shrug off US insurtech meltdown

A survey of Y Combinator companies makes it clear that the fintech subsector is far from dead

Given the recent run of concerned headlines that insurtech companies have generated, you’d be forgiven for anticipating that the startup category would find itself in dire straits. Not a bit of it.

As The Exchange explored recently, insurtech fundraising was strong in 2021 despite some notable public-market misfires from the sector in the year. After a strong fundraising period, a number of U.S.-based insurtech startups went public in 2020 and 2021. After some initially strong trading, the cohort has since been decimated by valuation declines.

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In the wake of the mess, we anticipated that startups building insurance products would dry up somewhat, while upstart tech companies targeting the back end of the global insurance market would prove more active. And yet. The latest Y Combinator cohort featured a number of insurance-focused technology companies, and some of them want to actually write policies.

Not all, of course. Our hunch about where insurtech startups are working on the mechanics of the existing insurance industry is coming good. We were just too pessimistic about the rest of the insurtech category.

Can’t stop, won’t stop

That the insurtech startup category is not dead should not be a surprise at this point. In the wake of 2021’s surprisingly strong data, there’s reason to believe that 2022 could bring more of the same. Using a Crunchbase query initially compiled by its News team, updated to constrain it to just Q1 2021 and Q1 2022 data, here’s the lay of the land for insurtech startups in capital terms:

• Q1 2021: $3.209 billion in recorded fundraising
• Q1 2022: $2.796 billion in recorded fundraising

If you are looking at the two numbers and wondering why we’re not shouting about a roughly $400 million decline on a year-over-year basis, let us help. Venture capital data collected by groups like Crunchbase, PitchBook, and CB Insights has to deal with the pace and depth of private-market disclosures, which are different from what public companies drop. They are laggier and less complete. So we expect the Q1 2022 number to “fill in” some as time passes, bringing it closer to its year-ago comp.

What matters more than any wiggle in the dollar amount is the simple fact that insurtech fundraising has not fallen apart. Indeed, it’s still chugging along. Good news, we reckon, for the startups building in the space today. Let’s talk about what they are focused on.