Aug 20, 2020

Lemonade vs Duck Creek Technologies: beyond the IPOs

Duck Creek Technologies
Ian Jeffrey, CEO and Co-Founde...
3 min
Ian Jeffrey, CEO and Co-Founder of Breathe Life, weighs in on what Lemonade's and Duck Creek's successful IPOs could mean for the industry
This summer, both Lemonade and Duck Creek Technologies have had stronger-than-anticipated IPOs...

This summer, both Lemonade and Duck Creek Technologies have had stronger-than-anticipated IPOs.

Both companies serve the individual property and casualty (P&C) markets, have brought in hundreds of millions of dollars in new capital and set billion-dollar-plus market caps. That’s about where the similarities end. 

With the insurtech industry (and many of its well-capitalised players) in the headlines these days, it’s worth digging deeper to understand the fundamental differences between these two recently-minted public firms and, along the way, seeing insurtech for the multi-faceted gem it has become.

First, let’s ‘double-click’ on Lemonade’s and Duck Creek’s respective markets. Lemonade (NYSE: LMND) sells its rental and home insurance policies direct-to-consumer (D2C), competing head-to-head with traditional insurance companies such as GEICO, Liberty Mutual, and Progressive. 

Duck Creek (NASDAQ: DCT), on the other hand, sells core system software to those same big-name insurers to help them power their businesses, a business-to-business (B2B) approach. 

While each company followed a very different path to IPO, the numbers are telling:


Year founded: 2015

Pre-IPO funding: $480mn

2019 FY Revenue: $67.3mn

IPO Proceeds: $319mn

Market Cap: $3.5bn


Year founded: 2000

Pre-IPO funding: $357mn

2019 FY Revenue: $171.3mn

IPO Proceeds: $405mn

Market Cap: $5.2bn

Lemonade secured significant VC in a short period of time that it successfully put to work for its investors. The company achieved “unicorn” status in April 2019, and its recent IPO undoubtedly provided shareholders with great returns. In the long term, however, its prospects aren’t as clear. 

D2C sales typically incur more risk than traditional P&C insurance carrier sales and while the company has done a good job of steadily lowering its risk profile, it remains less balanced than the incumbents. The company also has a long road to profitability, so it’s a good thing it has lots of cash to burn.

Duck Creek has taken a longer road with many twists and turns, successfully evolving from a legacy software provider to a SaaS provider (based on % of revenue). It started its transition to SaaS in 2014 and has grown its SaaS annual recurring revenue (ARR) to US$78.8m (as reported in the S-1). 

Prior to its IPO and recent $357mn private equity infusion, the company was owned 60 / 40 by Apax and Accenture. While Duck Creek never technically achieved ‘unicorn’ status prior to its IPO, it clearly was valued as one. The company is not profitable and plans to use IPO funds to buy back interests from existing shareholders, including Apax and Accenture, but its growing revenue and gross profit are encouraging.

Turning quickly from the public to private markets, Vertafor (B2B insurtech) is being acquired for $5.35bn by Roper Technologies and Majesco (B2B insurtech) for $729mn by Thoma Bravo. 2020 Q2 VC funding topped $1.56bn, and the InsurTech space has unicorns galore (e.g. WeFox, Hippo, Oscar, Root, etc.).

Clearly the insurtech market is reaching maturity and, at the highest level, is following two distinct paths: competitor and enabler. These very different business models will be interesting to watch over the long term. 

Digital D2C insurance companies such as Lemonade and Ladder are providing much-needed disruption to the insurance industry, but it’s unclear if their risk profiles are sustainable. B2B insurtechs may not look as sexy, but, by selling to already established carriers, they enable the existing industry, with its decades of experience and data, to catch up. 

In many ways, looking at the IPOs of Lemonade and Duck Creek is an ‘apples and oranges’ comparison, but that’s my point: one business model is proven, one is being tested. Together, we have a front-row seat for watching how much value each will create and for whom. 

This article was contributed by Ian Jeffrey, CEO and Co-Founder, Breathe Life 

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Jul 31, 2021

Global investment in insurtech reaches all-time high

2 min
Global investment in the InsurTech sector reached a new record during this year’s second quarter, according to the broker Willis Towers Watson

Global investment in the InsurTech sector reached an emphatic record during H1, 2021, as half-year funding of US$7.4 billion exceeded full-year investment in 2020, and in every other year, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.

It was found that the latest quarter saw 162 deals yield more than $4,824 million in investment, a 210% increase over Q2, 2020. The enormous quarterly total, itself more than any annual total before 2019, was driven largely by 15 mega-rounds of $100 million or more. Collectively, these deals reached $3.3 billion, or two-thirds of total funding during the quarter. The money was raised predominantly by later-stage players seeking expansion.


A need for the insurance community to reflect digital changes


Series B and C fundraisings drove a large number of deals in the second quarter, but the number of early-stage deals also increased. They were up by more than 9% from the previous quarter, and 200% from pandemic-stricken Q2, 2020. As a percentage of overall deals, early-stage activity held roughly steady, at 57%.

InsurTechs focused on distribution accounted for 55% of start-up deals, and for 10 of the 15 mega-rounds. Most of the distribution InsurTechs target reduced dependence on agent channels. Of all Q2 deals, 73% were for P&C-related InsurTechs, while 43 companies raised funds for L&H technology. Funds were raised by companies from 35 countries, including new entrants Botswana, Mali, Romania, Saudi Arabia, and Turkey.

Dr. Andrew Johnston, global head of InsurTech at Willis Re, said: “As technology changes our lives, society will demand an insurance community that reflects and supports our changing, digitally empowered behaviours. Consumers and businesses increasingly expect insurance to be delivered when and how they want it, and risk carriers that fail to respond will fall away over time. To embrace technology is a minimum survival condition. Those that use it to redefine service in the insurance world will thrive. That means a positive future for InsurTechs that bring a truly differentiated business approach to our industry. Some of them will create untold long-term opportunities for themselves and the insurance sector.”

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