Should we be concerned about insurtech valuations? – TechCrunch


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Hello everyone, I hope you had a beautiful week. I turned 32 after experiencing heartburn that destroyed sleep. So a little good and a little bad. But that didn’t stop the markets. No. Not a little. Which means we have a lot to talk about, including falling insurtech shares and what the situation could mean for startups, and a number of IPOs. This will be fun!

Before we get into the thick of our conversations with the new public companies Kaltura, Couchbase and Enovix, let’s talk about insurtech.

In the last year or so, we’ve seen a number of insurtech startups go public, including Root (Car insurance), Metromile (car insurance), and Lemonade (rental insurance). Here’s a quick rundown of what your performance looks like today:

  • Root: $ 7.72 per share, 71.4% less than its initial public offering price of $ 27 per share.
  • Metromile: $ 7.26 per share, 64.4% less than its post-combination highs.
  • Lemonade: $ 86.97 per share, 199.9% more than its initial public offering price of $ 29 per share.

Remember that Root and Metromile started trading after Lemonade, so their dips are not on a longer time horizon, but on a shorter interval. Which makes the situation even more interesting.

What’s going on? Well, two of the three insurtech public offerings (SPAC, IPO, etc.) are markedly underwater. That doesn’t bode well for Hippo, which is pursuing its own combination led by SPAC that should be ending in no time. The huge drops do not seem optimistic for insurtech startups, which will have to answer private market investors’ doubts about their value.

Does Lemonade’s strong post-IPO performance allay concerns? It’s complicated. The company has been busy expanding into new markets, including auto insurance. The company took a somewhat material blow from the Texas freeze earlier this year: based on your most recent earnings report – but beyond those two data points, it’s not entirely clear what the company is doing that the other two aren’t. But investors are excited about Lemonade, and not Root and Metromile. Finding out why that’s the case, and why your startup is more Lemonade than the other two, will be key for the many insurtech startups that are still scaling up to their own IPOs.

It’s IPO season

Exchange has been busy on the phone for the past two weeks, speaking with CEOs of publicly traded companies to try to learn from their recent experiences. So what follows are call notes with folks from Kaltura, Couchbase, and Enovix. Enjoy!

Kaltura

  • Reminder: Kaltura focused on online videos submitted to go public earlier this year before delaying its IPO Y doing another run at the funding event.
  • The Exchange spoke to Kaltura CEO Ron Yekutiel, who said the timing of the company’s IPO was affected by the public market turmoil of early 2021. That wasn’t a surprise, but it was good to get confirmation from anyway.
  • That freeze was caused in part by the implosion of Archegos, according to Yekutiel. That makes sense, but it was a first for us.
  • Yekutiel said his company wasn’t thrilled with the delay (going public is the only fundraiser he pre-announces, he noted), but added that investors his company had already spoken to the first time around were still excited about Kaltura. on its second run in an initial public offering.
  • According to the CEO, Kaltura’s preliminary results for the second quarter It showed investors that what was being talked about earlier in the year was coming true. He also emphasized the adoption of new products as key to the continued growth of the company.
  • The CEO was happy with the way his company traded and traded on its first day, getting a fixed 20% increase in value when trading. He pointed out that more would have been excessive and less would have been bad.
  • Regarding the lower valuation at which Kaltura traded compared to its March-era IPO price range, Yekutiel said he doesn’t have a third chance to make a first impression and that his company wanted to make the offer. They did so. Points for not getting lost in your own head.
  • Kaltura is up 17.5% from its initial public offering price of $ 10 per share at the time of writing.

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

Couchbase

  • Exchange spoke with Matt Cain, CEO of noSQL database company Couchbase. Couchbase is priced at $ 24 per share, above its initial public offering price range of $ 20 to $ 23 per share.
  • Today it is worth $ 33.20, up 9.2% in today’s trading as of this writing.
  • Cain was talking about a pretty strict script, a pretty standard situation among newly public CEOs worried about fucking and going to jail, so we didn’t get the precise answers we were looking for. But we still managed to learn a few things, including that Couchbase was another company that found the density of meetings that made remote roaming presentations possible was cumulative.
  • The CEO focused on discussing the scale of the opportunity ahead of Couchbase, namely the world of operational databases. It’s hard to find a bigger market, he argued, which made investors excited about what his company could achieve. Our reading here is that there is probably a lot of room for startups in the database world, if the market is as big as Cain thinks it is.
  • We wanted to learn a little more about how public market investors view open source companies, but we didn’t get too much out of him about it. Still, the company’s IPO is quite strong, implying that the creation of OSS isn’t exactly a detriment to a company hoping to exit.

Enovix

  • Exchange wanted to talk to the Enovix company, which had just gone public, because it debuted through a SPAC. Why does it matter? Because there are other battery-focused companies looking to go public through SPAC. So the chat was a good background for further work.
  • And we love talking to public companies. Who does not?
  • When asked if the merge and trade day under a new ticker symbol was like an initial public offering for his company, Rust said yes. Fair enough.
  • The company’s merge date for its SPAC went from the second to the third quarter, we noted. What was that for? Some SEC changes regarding accounting, in short. Our impression of the chat wasn’t a big deal, but one that caused a slight delay in Enovix’s trade date.
  • Why make it public through a SPAC? Cash, but also the private sponsor of their combination, which Rust said was a key resource in terms of operational knowledge. The company has also recruited from SPAC’s network of sponsors, which felt remarkable. (Hey look, real investor value added!)
  • When asked why your business is worth less than imminent SES SPAC, another battery company that has yet to generate revenue, Rust said his company’s value in its deal with SPAC was a negotiation, and that if the company is successful, it wouldn’t matter if it was valued at $ 1.1 billion or $ 1.4 billion. .
  • The fun thing about Enovix is ​​that it doesn’t start with its looming battery technology targeting EVs. Instead, aim for high-end electronics. Why? Quick cycles for placing batteries in hardware and possible pricing power. However, he intends to get to electric vehicles in time.
  • The company is worth $ 17.33 a share, giving it what Yahoo Finance describes as a valuation of $ 2.5 billion. That’s a good markup than I was expecting and could bode well for SES’s future debut.

Me, that was a lot. Thanks for staying with me. And thanks for reading the little newsletter from The Exchange. You can catch up in all our work here for extensive readings on the global market for venture capital, educational technology, and other topics. Keep it up!

Your friend,

Alex




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