Israel-founded online insurer Lemonade raises $319 million in New York IPO

Offering values the firm at $1.6 billion; Lemonade replaces home insurance agents with bots

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

Lemonade's Shai Wininger at the Tel Aviv offices of the insurance firm, December 20, 2017 (Shoshanna Solomon/Times of Israel)
Lemonade's Shai Wininger at the Tel Aviv offices of the insurance firm, December 20, 2017 (Shoshanna Solomon/Times of Israel)

New York-based online insurer Lemonade Inc., founded by Israeli entrepreneurs Shai Wininger and Daniel Schreiber, has raised $319 million on the New York Stock Exchange in an initial public offering of shares, at a market valuation of $1.6 billion.

The company sold 11 million shares at $29 per share. The market valuation of the IPO is less than the $2.1 billion the firm was valued at last year, after it raised $300 million in a private funding round led by Japan’s SoftBank, which owns a 27.3% stake in Lemonade, Reuters said on Thursday.

The firm’s shares will trade on the New York Stock Exchange under the symbol LMND.

The firm, founded in 2015, is a licensed insurer in 40 US states and operates in 28 of those states, including California, Illinois, New Jersey, New York, and Texas. Lemonade also holds a pan-European license, a prospectus filed with the US Securities and Exchange Commission in June said.

The company says it seeks to revolutionize the way homes are insured. Its technology does away with agents and replaces them with artificial intelligence and bots, applications that perform an automated task.

Customers answer a set of simple questions through a chat with the company’s bot, “Maya”; it takes 90 seconds to get insured, the company’s website says, and three minutes to get paid if and when a claim is made.

Unlike traditional insurers, Lemonade takes a flat fee — one that would normally go to the insurance brokers — and sets aside the remaining funds for claims. In a good year, when there’s money left unclaimed, the company does not pocket the money but donates it to causes their customers choose.

Since the launch of its product in 2016, the firm’s revenues have grown year on year, reaching $67 million in 2019. The company has, however, posted net losses throughout its years of activity. Net loss in 2019 totaled $109 million. For the three months ended March 31, 2020, revenue was $26 million and net losses were $37 million, the prospectus said.

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