FinTech And InsurTech. Worth Considering?

Lemonade, Paymentus, Marqeta... The Champions Of Tomorrow?

Marqeta, an Oakland-based company launched in 2010, went public on Wednesday at a valuation of $ 15.2B. The company helps businesses issue credit and debit cards to their staff and counts Uber, Square and DoorDash as its customers. According to its filling, its sales rose more then two-fold and reached $ 290.3m in 2020 as customers shopped more online.

Paymentus and Flywire, both financial technology providers, also went public in recent weeks:

• Paymentus is an electronic billing startup that generated sales of $ 92.2m (growing 32% year-on-year) during the 3 months ended March 31
• Flywire, which helps companies accept foreign-currency payments debuted on the Nasdaq at a $ 3.5B valuation

“Flywire’s IPO is kindling in the fintech fire. A record 11 fintechs went public through an IPO in the first three months of the year, according to data from market research firm CB Insights.” by Eliza Haverstock and Margherita Beale for Forbes

InsurTech Gets Crowded

Last week we covered WeFox, the German alternative to Lemonade. This week, TechCrunch reports that Branch raised $ 50m in a Series B funding round. Branch aims to offer auto and home insurance through an API, in an industry it says is “flawed and harms consumers”.

“The industry is structurally flawed and it harms consumers. Complicated policies, rising costs and marketing warfare all contribute to a vicious cycle that results in overpriced insurance” Branch Co-Founder & CEO Steve Lekas by Mary Ann Azevedo for TechCrunch

What Lemonade and fellow InsurTech players are doing may not be rocket science after all. Their innovation might lie more in the refreshed customer experience than in the so-called advance machine learning models they are using. In the long run, could they turn the insurance industry into a less expensive and more pleasant one?

BENCHMARK’S TAKE

• We doubt they will manage to generate considerable cost improvements that will enable them to cut prices
• However, they might make the experience more pleasant
• But, in a price-driven industry, will this matter?

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Kelly Sikkema on Unsplash.