Softbank Leads $120 Million Investment in AI-Based Insurance Company Lemonade
New York-based Lemonade offers property and casualty insurance policies in the U.S. through dedicated apps
New York-headquartered insurance company Lemonade Inc. raised $120 million in a Series C led by the Softbank Group Corporation, the company announced Tuesday. David Thevenon, a managing director at Softbank, will join Lemonade's board of directors.
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Lemonade’s existing investors also participated in the round, including Google Ventures, Menlo Park, California-based Sequoia Capital and Thrive Capital, led by managing partner Joshua Kushner. Lemonade previously raised $60 million in total equity funding.
Left to right: Lemonade's founders Shai Wininger and Daniel Schreiber. Photo: Yael Wissner-Levy
Established in 2015, Lemonade offers property and casualty insurance policies in eight U.S. states and is licensed in 17 more, charging a flat monthly rate of $5 for renters and $25 for homeowners. The company's business model bypasses traditional insurance brokers and instead relies on bots and machine learning technology to connect with customers, who can contact the company through its website or dedicated apps.
Lemonade is also certified as a B-type corporation, meaning a for-profit company that meets specific standards of social and environmental performance, accountability, and transparency. Once a year, the company donates a portion of its unclaimed money to charities chosen by its customers.
“By combining big data and artificial intelligence with a seamless user experience, Lemonade is truly revolutionizing the insurance industry,” said Mr. Thevenon in a statement.
“Softbank has no interest in companies that want to grow slowly,” Shai Wininger, Lemonade's president and Co-founder, said in an interview with Calcalist. “They’re firm believers in making aggressive moves, racing ahead and using AI to transform entire industries, and that’s exactly what we do. An advanced-stage company like Lemonade doesn’t need investors to navigate the industry anymore or to build the company. The involvement of a company like Softbank is an advantage since it can drive new partnerships.” However, he added, Lemonade would not enter an agreement that will bind the company in any way.
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The transaction is expected to close in the first quarter of 2018. Lemonade intends to use the funding to expand its operations outside of the U.S. in 2018.
Softbank has shown an increased interested in Israel-linked technology companies recently. Earlier this month Softbank invested $450 million in New York-based real estate startup Compass through its Vision fund. In October it joined a $73 million investment round in Israel-based LiDAR startup Innoviz Technologies, and in June it invested $100 million in Boston-based cybersecurity firm Cybereason Inc.