Survey of Y Combinator companies clearly shows that the fintech sub-sector is far from dead
Given the recent series of worried headlines generated by insurtech companies, you’d be forgiven for anticipating that the startup category would find itself in dire straits. Not even a little.
As The Exchange recently explored, insurtech fundraising was strong in 2021 despite some notable sector misfires in the public market during the year. After a solid period of fundraising, a number of US-based insurtech startups went public in 2020 and 2021. After initially strong trading, the cohort has since been decimated by valuation declines.
The Exchange explores startups, markets and money.
Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.
As a result of this mess, we expected startups creating insurance products to dry up somewhat, while early-stage tech companies targeting the back-end of the global insurance market would show more activity. And even. The latest Y Combinator cohort included a number of insurance-focused tech companies, and some of them actually want to write policies.
Not all of them, of course. Our hunch on where insurtech startups work on the mechanics of the existing insurance industry comes to fruition. We were just too pessimistic about the rest of the insurtech category.
I can’t stop, I won’t stop
That the insurtech startup category isn’t dead should come as no surprise at this point. Following the surprisingly strong data from 2021, there is reason to believe that 2022 could bring the same. Using a Crunchbase query originally compiled by its News team, updated to limit it to Q1 2021 and Q1 2022 data, here’s the lay of the land for insurtech startups in terms of capital:
- Q1 2021: $3.209 billion in fundraising recorded
- Q1 2022: $2.796 billion in fundraising recorded
If you’re looking at both numbers and wondering why we’re not shouting about a roughly $400 million year-over-year drop, let us help. Venture capital data collected by groups like Crunchbase, PitchBook and CB Insights has to contend with the pace and depth of private market disclosures, which are different from what public companies are dropping. They are slower and less complete. We therefore expect the Q1 2022 figure to “fill in” some over time, bringing it closer to its composition a year ago.
What matters more than any change in dollar amount is the simple fact that insurtech fundraising has do not fell to pieces. In fact, it still rolls. Good news, we believe, for startups moving into the space today. Let’s talk about what they focus on.