Mobile-first insurance startup Lemonade scores $120M round led by Softbank
Lemonade Inc., a young startup emerging as a major player in the insurance sector, this morning revealed that it has secured a $120 million funding round led by Japan’s SoftBank Group Corp.
The financing included contributions from several existing backers as well. Lemonade told VentureBeat that “most prior investors” participated but didn’t point out any specific members of the group, which includes big names such as Alphabet Inc.’s GV and Sequoia Capital.
The venture capital community’s interest in the startup mirrors its rapidly growing popularity among consumers. Lemonade provides insurance services for renters and homeowners via a mobile app that eliminates most of the hassle normally involved in buying a policy, as well as the need for a broker. Users instead purchase plans through a chatbot called Maya that asks them for the necessary signup information with natural-language questions.
Once all the relevant details are collected, Lemonade uses them to put together a personalized insurance plan. The buyer can then tweak the policy based on their needs before subscribing. Pricing starts at $5 a month for renters and $25 for homeowners.
Another feature that has enabled Lemonade to stand out from the pack is its Giveback program. Under the scheme, customers’ unused premiums are donated to a charitable cause of their choosing at the end of each year. This is facilitated by the fact that the startup underwrites its own plans and consequently has more control over the funds than if it were to rely on external insurer, as many other emerging providers do.
Lemonade claims to have issued tens of billions of dollars worth of policies to some 90,000 users since launching last year. In 2018, the startup will reportedly use the capital from the SoftBank-led round to develop new insurance products and expand beyond the U.S.
The transaction is expected to be completed in the first quarter. The round comes just days after SoftBank made a $450 million investment in Compass Inc., a startup whose efforts relate to real estate. It operates a home buying and rental portal platform similar to Zillow that aims to provide a more streamlined user experience.
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