Insurtech Scorched: Funding Plunges 18% to $0.9B

Insurtech funding took a nosedive in Q1 2024, plummeting 18% quarter-over-quarter to hit $0.9 billion – the lowest level since 2018. The decline was particularly steep in the property and casualty (P&C) insurtech segment, where funding dropped by a staggering 25% QoQ.

However, there are glimmers of hope amidst the gloom. Notably, the median insurtech deal size has actually increased in 2024 so far, reaching $5 million – up 19% from the full-year 2023 median of $4.2 million. This suggests that while overall funding may be down, investors are still willing to make significant bets on insurtech startups they believe have strong potential.

The uptick in median deal size is partly driven by an increase in early-stage deal sizes, with the median early-stage deal hitting $3.2 million in 2024 so far. Nevertheless, the average insurtech deal size ($9.8 million) is down 17% compared to 2023, indicating that while larger deals are still happening, they are fewer and further between.

Interestingly, Europe appears to be bucking the broader downward trend, with the region’s quarterly insurtech deal count rising for the first time since Q2 2022. Europe-based insurtech startups raised 28 deals in Q1 2024, up from 24 in Q4 2023, and funding more than tripled quarter-over-quarter to reach $284 million. The region also saw the two largest insurtech deals of the quarter, with Hyperexponential’s $73 million Series B round and ELEMENT’s $54 million Series C round.

On the flip side, exit activity in the insurtech space has almost ground to a halt, with M&A exits dropping from 13 in Q4 2023 to just 5 in Q1 2024 – the fewest since 2018. This trend contrasts with the fintech sector, where M&A exit activity remained relatively stable quarter-over-quarter.

While the insurtech funding landscape may be challenging at the moment, the data suggests that investors are still willing to make big bets on promising startups, particularly in the early stages. As the market evolves, it will be interesting to see if Europe’s insurtech upswing continues and if exit activity picks up in the coming quarters.