Should we be worried about insurtech valuations? – TechCrunch

Welcome back to The TechCrunch Exchange, a weekly newsletter for startups and markets. It’s inspired by what the Exchange column explores on weekdays, but it’s free and made for your weekend reading. Would you like it in your inbox every Saturday? Login here.

Hi everyone, I hope you had a nice week. I turned 32 after experiencing sleep wrecking heartburn. So a little good and a little bad. But that didn’t stop the markets. Lower Austria. Not a bit. Which means we have a lot to talk about, including falling Insurtech stocks and what the situation could mean for startups, and a number of IPOs. That will be fun!

Before we dive into the details of our chats with the newly listed companies Kaltura, Couchbase and Enovix, let’s talk about Insurtech.

Over the past year, we’ve launched a number of Insurtech startups, including Root (auto insurance), Metromile (auto insurance), and Lemonade (rental insurance). Here’s a quick recap of what their performance looks like today:

  • Root: $ 7.72 per share, down 71.4% from the IPO price of $ 27 per share.
  • Metromile: $ 7.26 per share, 64.4% less than after the merger.
  • Soda: $ 86.97 per share, up 199.9% from its initial public offering of $ 29 per share.

Remember that Root and Metromile began trading after Lemonade, so their declines are over a shorter period of time rather than over a longer time horizon. Which makes the situation all the more interesting.

What’s wrong? Well, two of Insurtech’s three public offerings (SPACs, IPOs, etc.) are under water. That doesn’t bode well for Hippo, which is pursuing its own SPAC-led combo that should be completed shortly. The huge declines don’t seem optimistic for insurtech startups, which have to answer private market investors’ doubts about their value.

Can Lemonade’s strong post-IPO performance allay concerns? It’s tough. The company is busy expanding into new markets, including auto insurance. The company took a somewhat significant blow from the Texas freeze earlier this year – according to its latest earnings report – but after those two data points, it’s not entirely clear what the company is doing what the other two are not. But investors are excited about Lemonade, not Root and Metromile. Finding out why this is and why their startup is more lemonade than the other two will be crucial for the many Insurtech startups still working towards their own IPOs.

It’s IPO season

The exchange has been busy on the phone for the past two weeks, speaking with CEOs of companies going public to learn from their recent experiences. So what follows are notes from calls made with people at Kaltura, Couchbase, and Enovix. Enjoy!

Kaltura

  • As a reminder, Kaltura, which is focused on online videos, filed for an IPO earlier this year before delaying its IPO and starting another run at the funding event.
  • The exchange spoke to Ron Yekutiel, Kaltura CEO, who said the timing of the company’s IPO was affected by the turmoil in public markets in early 2021. That wasn’t a surprise, but it was good to get confirmation nonetheless.
  • This freezing was caused in part by the Archegos implosion, according to Yekutiel. That makes sense, but it was new to us.
  • Yekutiel said his company wasn’t thrilled with the delay – the IPO is the only fundraiser you announce in advance, he noted – but added that investors his company spoke to the first time around are still there Kaltura was enthusiastic about the second run at an IPO.
  • According to the CEO, Kaltura’s preliminary Q2 results showed investors that what was talked about earlier in the year was coming true. He also emphasized the inclusion of new products as the key to further growth of the company.
  • The CEO was happy with his company’s price performance and trading on the first day and saw a flat 20% increase in value while trading. He noted that more would have been exaggerated and less would have been offensive.
  • Regarding the lower valuation that Kaltura put on compared to its IPO price range in March, Yekutiel said you don’t have a third chance to make a first impression and that his company wanted to close the offering. So they did. Points so as not to get lost in your own head.
  • Kaltura is up 17.5% at the time of writing from its IPO price of $ 10 per share.

An anecdote if I may. Kaltura won an early TechCrunch40 – the precursor to the TechCrunch50 event, itself a predecessor to today’s TechCrunch Disrupt conference series – thanks to a single vote cast via physical tokens. Yekutiel still has this token and showed it to us during our chat. Clean!

Couch foot

  • The Exchange spoke to the CEO of NoSQL database company Couchbase, Matt Cain. Couchbase is priced at $ 24 per share, which is above the IPO price range of $ 20 to $ 23 per share.
  • It’s worth $ 33.20 today and is up 9.2% in today’s trading at the time of writing.
  • Cain spoke from a pretty strict script – a pretty standard situation among new CEOs who worried they’d screw it up and go to jail – so we didn’t get the exact answers we were looking for. But we still learned a few things, including that Couchbase was another company that found the meeting density enabled by remote roadshows beneficial.
  • The CEO focused on discussing the extent of the Couchbase opportunity, namely the world of operational databases. It’s hard to find a bigger market, he argued, which is what got investors excited about what his company could possibly achieve. We read here that there is probably a lot of space in the database world for startups if the market is as big as Cain thinks it is possible.
  • We wanted to learn a little more about how public investors see open source companies, but didn’t see much from him. Still, the company’s IPO is pretty darn strong, which means the OSS development isn’t exactly a disadvantage for a company hoping to get out.

Enovix

  • The exchange wanted to chat with the newly listed Enovix as it was debuting through a SPAC. Why does that matter? Because there are other battery-oriented companies that want to go public via SPACs. So the chat was a good background for later work.
  • And we love talking to public companies. Who would not do that?
  • When asked if the day of the combination and trading under the new ticker symbol was like an IPO for his company, Rust said it was. Fair enough.
  • The company’s merger date for its SPAC slipped from Q2 to Q3, as we noted. Why was that Some SEC changes to accounting, in a nutshell. Our impression from the chat wasn’t a big deal, but one that resulted in a slight delay in Enovix’s trading date.
  • Why go public through a SPAC? Cash, but also the special sponsor of their combination, which Rust said was a key resource in terms of operational knowledge. The company also hired out of its SPAC sponsor’s network, which felt remarkable. (Hey, look, real value for investors!)
  • When asked why his company is worth less than the upcoming SES SPAC, another battery company not yet in need of revenue, Rust said the value of his company in his SPAC deal is a negotiation and if the company succeeds whether that was it? with a value of $ 1.1 billion or $ 1.4 billion wouldn’t really matter.
  • The nice thing about Enovix is ​​that it doesn’t start with its upcoming battery technology for electric vehicles. Instead, it targets high-end electronics. Why? Fast cycles to bring batteries into hardware and possible pricing. However, it intends to get into EVs in a timely manner.
  • The company is worth $ 17.33 per share, which Yahoo Finance describes as a valuation of $ 2.5 billion. That’s a good addition to what was expected and could bode well for SES’s own future debut.

Yeah, that was a lot. Thank you for staying with me. And thank you for reading The Exchange’s little newsletter. Here you can find out about all of our work if you would like to find out more about the global venture capital market, Edtech and other topics. Stay calm!

Your friend

– Alex

Leave a Comment