US insurtech Lemonade files for IPO to raise upwards of $100m

By Oliver Smith on Tuesday 9 June 2020

Digital Banking

A vote of confidence for insurtech and fintech.

US insurtech Lemonade files for IPO to raise upwards of $100m
Image source: Nanxi wei/Unsplash.

Home insurance startup Lemonade has filed for an initial public offering on the New York Stock Exchange in the coming weeks, during which it’s hoping to raise at least $100m.

Lemonade launched in 2015 on a mission to digitise insurance and, unlike many of its rivals, built a fully-licenced home insurance product, as opposed to launching a marketplace or reselling other insurance products.

Today the startup operates across the US, focusing on homeowners and renters, and operates an unusual business model where it keeps a flat 25 per cent fee from customers’ premiums while using the remaining to pay claims and donate to charity as part of its annual Giveback programme.

“Lemonade is rebuilding insurance from the ground up on a digital substrate and an innovative business model,” the company wrote in its IPO prospectus. 

“By leveraging technology, data, artificial intelligence, contemporary design, and behavioral economics, we believe we are making insurance more delightful, more affordable, more precise, and more socially impactful. To that end, we have built a vertically-integrated company with wholly-owned insurance carriers in the United States and Europe, and the full technology stack to power them.”

The model has so far been successful and has won Lemonade many fans, according to its IPO filing the business turned over revenue of $26m in the three months to 31 March, versus $11m for the same period in 2019.

Losses during the quarter stood at $36.5, versus $21.6m last year.

Lemonade most recently raised $300m from SoftBank in a fundraise that valued the business at $2.1bn.

While the valuation and share pricing of its imminent float has yet to be decided, the company did reveal it’s looking to raise at least $100m, another placeholder until the final figure is decided.

Its announcement is important on two fronts, firstly that it indicates a further opening of US IPOs in the wake of coronavirus, and secondly as a vote of confidence in the insurtech and wider fintech sector by public markets.

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