Lemonade Inc., the startup behind a popular artificial intelligence-powered homeowners’ and renters’ insurance service, today filed to go public on the New York Stock Exchange.

New York-based Lemonade was valued at more than $2 billion after its most recent funding round in early 2019.

The startup hit the scene in 2016 and has since amassed a user base of over 700,000 customers, raising $480 million along the way from investors that including SoftBank Group Corp. and Alphabet Inc.’s GV venture arm. Lemonade is led by Chief Executive Daniel Schreiber (pictured, right) and Chief Operating Officer Shai Wininger (left).

Lemonade’s move to launch an initial public offering is notable because it’s the latest in a series of tech startups to have decided to hit the stock market after a prolonged lull in IPO activity. On Friday, online used car marketplace operator Vroom Inc. boosted the price target for its forthcoming listing. Also last week, sales data provider ZoomInfo Technologies Inc. raised over $934 million in the biggest tech IPO of 2020.

But Lemonade may face a more difficult path to the stock market because unlike ZoomInfo, it doesn’t boast a positive free cash flow. The startup is currently deep in the red: It lost $108.5 million in 2019 on revenue of $67.3 million.

Yet the numbers in Lemonade’s S-1 filing contain some encouraging signals. Although its net loss jumped 105% last year, revenue more than doubled, demonstrating a significant improvement in the ratio of expenses to sales. Moreover, the startup is counting that the revenue it generates from each customer will increase as time passes.

“The need for insurance grows in line with the wealth and age of its customers, as accumulated assets and growing responsibilities naturally translate into higher insurance spend,” Lemonade stated in the IPO filing. “As of March 31, 2020, we had 12,445 customers of condo insurance policies, 10% of whom had graduated with us from a renters policy, a percentage that has grown steadily over the life of the company.”

The startup sets its renters’ and homeowners’ insurance products apart from traditional policies through a combination of low entry prices and a streamlined user experience. It enables customers to file claims through a mobile app, handling about 30% of claims instantly using automated AI algorithms. Users can donate the money left over after claims and Lemonade’s fees to charities of their choice.

Lemonade has specified a maximum fundraising target of $100 million in its IPO filing, a sum often used as a placeholder before the final figure is determined. The company will float on the NYSE under ticker symbol “LMND.”

Goldman Sachs, Morgan Stanley, Allen & Co. and Barclays are serving as lead underwriters for the offering.

Photo: Lemonade