There is ’a positive rebound’ for VC-backed insurtechs, with ’series B funding picking up’, says chief executive
Insurtech funding from venture capital (VC) firms is expected to reach $4.2bn (£3.24bn) by the end of 2024 – a similar projection to figures seen in 2018 and 2023 – according to the latest report from Dealroom, Mundi Ventures and Mapfre.
The fourth edition of The State of Global Insurtech report, this year published on 5 November 2024, revealed that VC funding – which is a form of private equity financing – is stabilising for insurtech startups undertaking series B and C funding rounds.
Series B funding is typically used to scale business growth, while series C backing is often used to expand operations and prepare for an exit – like an initial public offering (IPO) or acquisition.
VC-backed insurtech exits remain higher than pre-pandemic levels, driven primarily by M&A or buyouts.
During the first three quarters of 2024, VC funding for insurtechs reached $3.2bn (£2.47bn) – 7% less than in 2023. This means that 2024’s Q4 investment projection of $4.2bn (£3.24bn) hints at a funding rebound to end the year.
Javier Santiso, chief executive and general partner at Mundi Ventures, said: “After the uncertainty of previous years, the global insurtech market is now showing signs of further stabilisation.
”While the frenzy has cooled, we are seeing a positive rebound in the early growth [or] breakout stages, particularly with series B funding picking up.”
Leire Jiménez, chief innovation officer at Mapfre, added: “What we are seeing worldwide is a slow down in the economy since 2022, which is directly impacting investment in insurtech venture capital, [in] some geographies more than others.”
Cautious investment environment
The report further found that late stage startups, referring to firms seeking funding rounds of more than $100m (£77.23m), have experienced the greatest VC decline - this backing is projected to reach $983.1m (£762m) by the end of 2024, compared to a peak of $8.3bn (£6.43bn) in 2021.
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Santiso said: ”The late stage market remains significantly constrained, with a freeze in growth and IPO phases. Many startups are now gearing up for potential IPOs in 2025 or 2026, setting profitable models and waiting for more favourable market conditions.
”This cautious environment is shifting investor focus towards proven business models with solid unit economics.”
Yoram Wijngaarde, founder and chief executive at Dealroom, added: “Insurance is a vast industry that has been largely unchanged for hundreds of years. It remains a huge target for tech efficiency and scale, but one that has been difficult to crack.
”Insurtech 2.0 is unbundling the challenge, zeroing in on niches like business to business (B2B) software as a service (SaaS), risk management, climate and cyber, with greater traction.
“Global breakout stage investment is on track to grow year-on-year in 2024. Insurtech is iterating.”
- Insurance Times has converted dollar amounts into pound sterling at an exchange rate of £1 = $1.29, as at November 2024.
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