A pulse check on funding and M&A exits in InsurTech
As we enter the second quarter of 2022, we’re already seeing some substantial changes in the InsurTech sector compared to last year, according to data from CB Insights in their “State of Fintech Q1’22 Report.” This annual report reveals global fintech funding, including banking tech, digital lending, wealth tech, capital markets tech and, of course, InsurTech.
The first quarter of 2022 saw a 58% drop in InsurTech funding compared to the fourth quarter of 2021. The total funding in this quarter was $2.2 billion across 143 deals, compared to $5.3 billion across the same number of deals—143—during the fourth quarter of 2021. This drop appears even more dramatic considering that 2021 had record-breaking funding levels, with nearly $20 billion, a 176% jump from 2020.
This funding dip occurred among the entire fintech sector, which as a whole saw a 18% quarter over quarter decrease.
Another area that has seen a drop in 2022 is deal sizes. In 2022, the average InsurTech deal has been $19 million, or almost half the $33 million average deal size across all four quarters of 2021. It will be interesting to see if this fluctuates throughout the rest of 2022.
One area that appears to be on track to surpass last year’s pace is the number of mergers and acquisitions. We’ve been seeing a rise in mergers and acquisitions in the InsurTech and insurance industries for years now, but Q1 saw a record high number of InsurTech M&A exits. The number is already at 26 for 2022, which is nearly half of last year’s total of 58.
There are many reasons for this significant drop in funding, including the fact that InsurTech companies set records with fundraising in 2021, something that is difficult to replicate. Also, rising interest rates likely have affected the amount of funding that has occurred this year.
Regardless, we are optimistic that the insurance sector remains full of tech-driven opportunity, and we are excited to continue investing in innovations for the benefit of our customers.
April 28, 2022