In Q3 2023, $1.7 billion was invested across 115 deals, “representing an increase of 53.0% in deal value but roughly flat in terms of deal count, QoQ,” according to the latest Insurtech industry report from Pitchbook.
The deal value was “the highest amount over the past four quarters,” the Pitchbook Insurtech report revealed.
Venture investments in Insurtech have reportedly “increased across most segments during the quarter except for underwriting and administration & claims. Property & casualty (P&C) insurtech companies raised the most capital during the quarter at roughly $678.9 million.”
The Pitchbook insurtech sector report further noted that “a large portion of this capital was driven by multiline retail insurance provider Branch’s $215.0 million Series C.”
As explained in the update, the startup is similar to Lemonade but “structured as a reciprocal insurance exchange rather than as a full-stack carrier—or as a managing general agent (MGA)—such as many other insurtech companies.”
The report from Pitchbook also mentioned that “not only is the round size surprising in this environment, but it is also unclear how Branch’s investors will earn a return on investment since reciprocals are owned by its policyholders, not shareholders.”
As mentioned in the research report, it is likely “that this investment is structured differently than traditional VC investments.”
The report from Pitchbook, covering the Insurtech ecosystem, pointed out “that Q3 valuations remain higher than those in full-year 2022, a trend that started last quarter.”
As stated in the update, seed, early-stage, and late-stage median valuations “are up to $8.4 million, $28.5 million, and $55.0 million, respectively, representing increases of 5.3%, 50.0%, and 34.8%, respectively, compared to 2022.”
As noted in the research report, this corresponds “with increased deal sizes for all stages as well, with seed, early-stage, and late-stage deal sizes up to $2.5 million, $3.8 million, and $10.0 million, respectively, representing +22.1%, -10.1%, and +23.5% changes, respectively, from full-year 2022.”
The report concluded that pre-money valuation stepups, “a measure to gauge valuation accretion between stages, were similar across all venture rounds, with an overall industry median step-up of 1.”