Insurance startup Lemonade Inc. today announced the signing of a $120 million Series C funding round led by the SoftBank Group with participation from existing investors.
As part of the deal, SoftBank Group’s David Thevenon will join Lemonade’s board.
The new funds will be used to expand into global markets and to bolster its current staff of 60 in the New Year.
The company, which is powered by artificial intelligence and behavioural economics, did not disclose its valuation but according to Bloomberg, it will be more than $500 million, up from the previous round.
Lemonade is revolutionizing the insurance industry by combining big data and AI with a seamless user experience.
Over the course of 2017, the firm obtained licenses in 25 states and created a way for real estate and commerce websites and apps to offer Lemonade’s products, both of which have aided growth and adoption.
Lemonade reverses the traditional insurance model by digitizing the entire insurance process, reducing costs and bureaucracy through giving. They take a flat fee and donates a portion of unclaimed premium dollars to nonprofits during its annual ‘Giveback’.
The company began offering homeowners and renters insurance in New York in late 2016. In its first year in market, Lemonade set a world record when it paid a claim in 3 seconds; used AI to offer the first insurance policies with ‘Zero Everything’: zero deductible, zero rate hikes, zero depreciation; gave back over 10% of its revenues; and launched insurance as an API.
The two-year-old startup continued its strong momentum into 2017 where it obtained licenses in 25 states and created a way for real estate and commerce websites and apps to offer Lemonade’s products aiding growth and adoption in the process.
The company’s growth in 2017 was even beyond their own expectations according to co-founder and Chief Executive Officer Daniel Schreiber.
Schreiber revealed in an interview that the insurance startup will close the year with around 90,000 customers, 700% more than their 13,000 annual target.
The massive growth was one of the reasons why SoftBank decided to invest.
“We have been impressed by the team’s creative approach to disrupting the traditional insurance model with innovations like Zero Everything policies and Giveback, and we look forward to supporting the company’s rapid growth,” David Thevenon, a senior investment professional within the SoftBank Group told the media.
The transaction is expected to close in Q1 2018, subject to receipt of regulatory approvals and satisfaction of other customary closing conditions.