VC Roundtable: Is insurtech investment balanced appropriately?

January 26, 2021 3:04 PM

We asked our VC panelists six questions. The fifth: What is a technology area you think is over-invested in? Under-invested? Has the crisis impacted your view of these techs?

Go back to our VC roundtable homepage, with bios for participants and more.

Martha Notaras, Brewer Lane Ventures

There is so much more to do on coretech, and technologies that support the backend processes of incumbents. This includes cloud coretech providers like Socotra, and also the no code/ low code startups, which are gaining real traction by putting technology in the hands of the business, not the IT department. We are seeing AI solving real problems. So, I see a lot of tech areas that are still under-invested.

Kyle Beatty, American Family Ventures

Eric Emmons, MassMutual Ventures

In almost every vertical, we see an increasing population of companies spending ever more on direct-to-consumer outreach while offering relatively undifferentiated product. This has led to some unsustainable CAC (customer acquisition cost) payback times, and long-term value/CAC ratios predicated on some pretty large and unproven future assumptions. There’s no law that says you can’t start the n+1th company buying Google AdWords in a crowded vertical, but we’d argue that the economics are getting increasingly difficult for the last entrants.

Ryan Helon, Rev1 Ventures

Well, if you look at patterns of where capital is being invested, a lot of capital has gone into online distribution channels. We think finding a unique customer acquisition cost advantage is really key to win in that sector, as there is a lot of competition to acquire customers with established digital customer acquisition strategies. We think there is opportunity in segments such as agency tools and technologies (i.e. tech that helps agents run their businesses better), and we have observed less investment activity in this sector.

Erik Ross, Nationwide

In terms of overinvested, we think high visibility insurance sectors, like auto, have probably received an unfair share of investment dollars, especially relative to the quality of the incumbents. There are so many untapped opportunities in less popular lines of insurance/coverage types that still have large markets. We particularly believe the areas of silvertech (technology, products, and services for older adults) is a huge opportunity space that includes insurance and financial services that is in need of great founders and companies.

Sam Evans, Eos

The integration of life sciences and digital health solutions with life and health insurance is an area of under-investment, and one that the crisis has highlighted and will accelerate.