(Image source: Ethos website.)
Ethos (San Francisco), an InsurTech distributor with the stated mission of transforming the life insurance space, has raised a $200M Series D investment round, bringing its valuation to $2B. The company, which began doing business in June 2018, reports that its revenue and users have each grown by more than 500 percent year-over-year, and the company expects to issue $20 billion of life insurance coverage this year.
The Series D round was led by General Catalyst. Past investors Sequoia Capital; Accel; GV (formerly Google Ventures); and Jay-Z’s Roc Nation also participated, alongside Glade Brook Capital Partners. Ethos is also backed by the investment vehicles of stars Will Smith and Robert Downey Jr. Funding raised to date totals $300M.
“We are on a mission to protect the next million families and will use this money to continue improving the best insurance customer experience ever created,” comments Peter Colis, Ethos CEO and Co-Founder. “This funding will help us enrich our technology and data platform, and help us launch new products to enable everyone an opportunity to protect their families.”
Ethos describes its approach as using innovative machine learning and data science technologies to upend the traditional life insurance model. A company statement asserts that its startup technology advantage breaks down barriers that have long inhibited customers from purchasing life insurance, including underwriting with no medical exams, blood tests or complex paperwork. Ethos says this enables it to approve many applicants who would otherwise be denied coverage or punitively treated regardless of financial status, health status or age.
“We’re very excited to invest in the vision and team at Ethos,” comments Kyle Doherty, partner, General Catalyst. “Traditional life insurance remains largely unchanged over the years. It’s an area that’s ripe for innovation, and Ethos’ successful execution demonstrates they are clearly ahead of all others in leading this digital transformation.”
Ethos reports that its growth has been accelerating since its previous investment round in 2019. In addition to its revenue and user growth, the company says it is nearing $100M in annualized gross profit and increasing EBITDA in the next year. Ethos asserts that it has surpassed its competitors in both annualized revenue and gross profit and has become the market leader in the InsurTech life insurance space.
‘Completely Modern Experience’
“The US life insurance industry is one of the largest markets in the world, but it has been slow to move online,” comments Nate Niparko, Partner, Accel. “Ethos offers a completely modern experience that finally brings the life insurance market online, and the company is growing very quickly as a result.”
“Ethos has fundamentally changed the life insurance industry by providing a tech-enabled, vertically-integrated solution,” says Roelof Botha, Partner, Sequoia and Ethos board member. “We’ve been inspired by Ethos’ mission since we first partnered with Peter and Lingke at the seed, and we are thrilled to continue working with them and the team to make life insurance more accessible.”
I’m happy to see the obvious success that Ethos is experiencing and I can only cheer on their intention to break “down barriers that have long inhibited customers from purchasing life insurance, including underwriting with no medical exams, blood tests(,) or complex paperwork.” But if Ethos has truly indeed “become the market leader in the InsurTech life insurance space,” that is a long way away from “fundamentally change(ing) the life insurance industry.” I see nothing in the Ethos approach that has even captured the attention of the established life insurance incumbents, let alone changed their way(s) of doing business. If that is indeed the case, then I suppose the best we can hope for now — some 30 years into “the digital age” — is that, as Hemingway said of bankruptcy, the
necessary changes are happening gradually, gradually, then all of a sudden.