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SoftBank-Backed Lemonade Snags $319M In IPO At $1.6B Valuation

July 02, 2020 at 11:28AM

Lemonade, the insurance startup backed by Japan’s SoftBank, came off an initial public offering (IPO) with $319 million, according to Reuters.

The company is valued at $1.6 billion, according to the IPO, which is less than the $2.1 billion it was valued at last year.

Lemonade is another in the slew of companies taking advantage of the recovery of the venture capital market in the U.S. following a downturn during March and April due to the onset of the coronavirus pandemic.

The company, formed in 2016, works to digitize the insurance process, including replacing brokers and paperwork with algorithms, and the company claims to provide insurance policies to homeowners and renters in a matter of minutes.

The company priced shares at $29 per share with 11 million in total, Reuters wrote. That was higher than estimated — the indicated price range earlier Wednesday (July 2) was between $26 and $28, and the company had only guided the offering to be between $23 and $26.

Last year, Lemonade raised $300 million in a round led by SoftBank. Allianz SE and GV, the venture capital arm for Alphabet, also participated, Reuters wrote. SoftBank owns a 27.3 percent share in Lemonade.

Since that time, Lemonade has “pursued breakneck revenue growth at the expense of widening losses.”

The change toward digital services has benefited Lemonade immensely, PYMNTS reported recently. The company, upon its filing to go public, said the change came from the age demographics of those using its service. According to the company, around 70 percent of its current customers are under age 35, and around 90 percent were not switching from another carrier to join Lemonade’s ranks.

According to Lemonade, the Federal Reserve’s estimate that people under 35 usually had an $11,000 median net worth might not last forever — data shows that those numbers could grow 10 to 15 times as the customers age.

Showing the importance of building relationships, Lemonade said clients tend to move up from renters’ policies to homeowners or condo policies as time goes on.

SoftBank-Backed Lemonade Snags $319M In IPO At $1.6B Valuation …

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