Next Insurance Raises $250M in Series E Financing Round

With the new round, led by FinTLV Ventures and Battery Ventures, Next has doubled its valuation in four months to $4 billion.

(Image credit: Mohamed Hassan.)

Next Insurance (Palo Alto), a startup direct seller of small business insurance announced today that it has raised $250 million in a Series E financing round led by led by FinTLV Ventures and Battery Ventures with participation from CapitalG, Group 11, Zeev Ventures, Founders Circle and G Squared bringing the company’s valuation to $4 billion and total funding raised to more than $880 million. Next Insurance contextualizes the round as following a “momentous” six months during which the company announced two acquisitions, added new strategic partners, and doubled its gross written premium. FinTLV Ventures founder and managing partner Gil Arazi and Battery Ventures general partner Michael Brown, will join as board observers.

Matthew Josefowicz, President and CEO, Novarica.

As the InsurTech digital distributor market matures, companies such as Next Insurance that have been able to show success and growth continue to attract high levels of funding, observes Matthew Josefowicz, President and CEO of research and advisory firm Novarica (Boston). “It’s interesting to note that one of the success metrics they cite is the tripling of their agent partner business,” he comments. “Like Pie and other digital distributors, it seems they are finding that using intermediaries as well as being direct sellers is an important part of their growth strategy.”

“While online sales of small business insurance are increasing, we’ve yet to see the major investment in ad spending that drove substantial growth in direct online personal lines over the last decade,” Josefowicz adds. “So, agents are still a key part of many short-term growth strategies. If you’re looking for short-term growth, you have to fish where the fish are today, not where they should be tomorrow.”

Gil Arazi, Founder, FinTVL.

“Next Insurance’s full-stack approach to providing coverage for small businesses has created a radical paradigm shift in the legacy insurance industry,” comments Arazi, founder and managing partner at FinTLV. Ventures. “This value proposition, combined with a differentiated focus on machine learning and growing an innovative product portfolio has created unstoppable momentum that is undoubtedly changing how small businesses shop and purchase insurance. We believe that Next Insurance represents the future of Insurance.”

Next Insurance sought to address an underserved small business insurance market historically dominated by large insurers who cater to big commercial customers or individual consumers. The lack of small business policy customization combined with a customer experience that needs to be digitally transformed, has left small business owners feeling neglected as they search for general liability, professional liability, workers’ compensation and other must-have coverage, a Next Insurance statement says. The statement asserts that until Next developed its offering, there was no company committed to providing customized policies for all small business needs underpinned by a technology-first approach. The company cites as validation its result of a customer experience marked by 4.7 star rating from thousands of customers and a growing customer base of over 200,000.

Michael Brown, General Partner, Battery Ventures.

“Next Insurance is modernizing insurance coverage and the customer experience by creating greater access to digital coverage and reinventing the way policies are designed, sold and purchased for everyday small business owners,” comments Battery Ventures’ Brown. “We believe Next Insurance is fundamentally changing the landscape of insurance and their passion for serving and supporting small businesses perfectly align with Battery’s investment goals. This is how you create an iconic insurance brand that customers love.”

$881 Million Raised

With this round, Next Insurance reports that it will have raised $881 million to bring its value proposition to market, which the company describes as simple, affordable, and tailored insurance products to the American economy’s most important growth engine: small businesses and the self-employed. Next Insurance says that its technology-first approach drives down costs by up to 30 percent when compared to traditional policies. Next Insurance provides the following as other examples of its market momentum in the six months since the company announced its previous $250 million financing:

  • Named a small business insurance provider for Amazon’s Business Prime small business customers.
  • Acquired AP Intego, a leading digital insurance agency, with key partnerships with some of the largest small business software ecosystems in the U.S., including Intuit, Gusto, Square and Toast; doubled the size of Next Insurance’s business; and expanded Next Insurance’s customer base to more than 200,000 small businesses.
  • Acquired Juniper Labs, an innovative provider of alternative open data and underwriting technology, to accelerate the development of enhanced machine-learning capabilities and tools to strengthen the omni-channel customer experience.

Next further notes that 2020 proved to be a record year in 2020 wherein the company:

Guy Goldstein, CEO, Next Insurance.

  • Increased the number of customers holding more than one policy by 10x
  • Tripled the amount of premium written by agent partners
  • Hired 180 new employees
  • Hit over $1 million in written premium in a single day for the first time ever

“This latest round of financing is a validation of our vision which is to make it dramatically easier for small business owners to get the insurance coverage they need by removing friction from the customer experience,” comments Guy Goldstein, co-founder and CEO, Next Insurance. “It starts with developing a comprehensive digital product portfolio under one roof, continues with leveraging technology that improves the customer experience, and ends with a network of integrated partnerships that bring policy purchasing to the customer within the systems they already use. We’re not done improving the lives of small business owners, but we’re proud of what we’ve accomplished thus far.”

Strategic Acquisitions

Karlyn Carnahan, Head, The Americas, Property Casualty, Celent.

Just as personal lines has become commoditized and moved to a world of digital distribution, the online sales of small business and workers’ compensation insurance is fast increasing, according to Karlyn Carnahan, head of Celent’s North American property casualty practice. “Our research shows that over 30 percent of small businesses would prefer to buy their insurance online as they’re looking for a fast, simple, low cost option,” she says.  “Success for an online provider, like any other insurer requires the ability to provide a simple onboarding experience as well as solid underwriting—which relies on data.”

Carnahan cites Next’s acquisition of Juniper as a significant enhancement of the company’s ability to use data both in the underwriting process as well as in the onboarding process, Carnahan adds. “Next’s acquisition of AP Intego provided them with a large customer base to cross sell,” she elaborates. “They are still a young company but they’ve shown tremendous progress over the last four years and seem poised to take advantage of the growing online market.”

Editor’s Note: Analyst comments were added after initial publication of this article. 

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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