InsurTech: Navigating the Fluctuations in VC Funding
InsurTech looked to be in a slump at the end of 2022, but Q1 2023 indicates there could be an upswing. Could this be the time for startups to start pumping money into their marketing budgets?
A Quick Look at the Global InsurTech Market
All tech funding slowed during 2022, leaving Q4 with highly demoralizing year-on-year figures. InsurTech was no exception and represented the largest declining sector within the overall FinTech sphere, dropping by 50% compared to 2021.
However, fast-forward to Q1 2023 and the InsurTech sector received $1.39 billion in funding, with the average deal price lifting by 25.3%.
The interesting factor here is that the number of deals hasn’t increased significantly, but investors are laying more money on the line for tech startups that really impress them.
Types of InsurTech Products Impacted
During the end-of-year slump, there was very little discrimination in the insurance products impacted. Tech companies linked to life, health, and asset insurance all felt the pinch as investors closed their purse strings.
The collapse of Silicon Valley Bank (SVB) earlier this year has also had an impact, as many tech startups utilized the bank for lines of credit to support dwindling capital. The impact of SVB’s failure might not be fully understood until we see Q2 and Q3 figures later in the year. The Global InsurTech Report from Gallagher Re suggests that some potentially successful InsurTech ventures will get “washed away.”
However, the report also states that InsurTech firms that continue to grow and succeed will gain more respect within the tech industry: “The collapse of the SVB could very well be the single pivotal moment where InsurTech is no longer associated with lofty valuations and fundraising, and instead known as technology firms (either enabled or offering as a service) focused on the (re)insurance industry.”
Final Word
37.7% of InsurTech investment deals in Q1 2023 were for early-stage startups. It’s a great time to audit your marketing strategy and invest in techniques to attract leads and investors. Book your 15-minute introductory call and talk to Arch Collective about how we help startups like yours get noticed and achieve meaningful, sustainable growth.
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