June 24, 2022
Happy Friday, fintech deals readers. We made it!
🚨 Situational awareness: The Harmony Protocol team identified a theft of $100 million on its Horizon bridge, with assets stolen on both the Ethereum and Binance Smart Chains.
- According to blockchain analytics firm Elliptic, more than $1 billion has been stolen from cross-chain bridges this year.
1 big thing: Insurtech pains and gains
If combined into one category, insurtechs have been the worst performing IPOs among the fintechs that went public amid the pandemic, based on data from Renaissance Capital.
Why it matters: That hasn't turned Emmalyn Shaw, managing partner at Flourish Ventures, away from betting on the space.
Shaw discussed with Lucinda what caused the most recent insurtech implosion, and why she's still investing in the area. Her responses have been lightly edited for clarity:
Why did all the insurtechs lose public market confidence after hitting public markets?
- "I would say that when you look at where insurtechs are today, a number of them are what we call distribution plays. By and large, the massive disruption so far has been in terms of how you sell insurance."
- "A lot of those companies — the Lemonades, Roots, Hippos — also all went out during a euphoric time. But their fundamentals were also pretty unstable. When the market started to kind of look underneath the hood, they were like, 'Look, its top line growth is great, but the fundamentals are a little bit concerning.'"
- "It's not to say all distribution insurtechs have weak fundamentals, it's just that those [did] and they were out there in the public market. Selfishly, I note we're in Kin."
But you still remain bullish on insurtech as a category.
- "I think it's really kind of the second and third wave of insurtech where we'll see more innovation. For example, the use of automation to speed up the business process and A.I. to better underwrite insurance, expanding the data sets accessed so that ultimately will lead to better actuarial analysis."
- "Or insurance as a service — embedding insurance that maybe doesn't exist today in different platforms — say pet insurance on a Wag!"
Can you give a concrete example of that, an insurance product that doesn't exist?
- "One example I've heard of: Say we're renting an RV. There's normal car insurance-like products that you would use. But you can also use an RV as a home and enhance it. So there's all these pieces that these new insurance platforms are creating that had not existed before."
And that could create a more stable, repeatable revenue model?
- "Right. They're enabling other insurance providers and platforms to be able to deliver insurance."