InsurTech companies are an emerging and fast-growing sector of the financial services industry. Against a backdrop of robust fundraising numbers and high profile exits via SPAC or IPO, many of these companies begin as start-ups and a few exciting years later, are able to raise millions of dollars in hopes of becoming the next “unicorn”. While this business trajectory may seem simple and attractive, these companies usually have a highly complex ownership structure made up of many investors of different origins, including venture, corporate, and/or private equity, all with different preferences and capital structures.
Valuing an InsurTech company can be complicated and difficult, but carries important significance for employees, investors, and stakeholders for the company. While all InsurTech companies have differences, including what niche (distribution, claims, benefits, etc.) they operate in or what stage of development the company is in, understanding the value of the business is critically important.
