Looking to become the world’s first P2P insurance company, Lemonade draws a massive seed round from top investors Sequoia and Aleph
Bursting out of stealth mode, the team at Lemonade announced on Tuesday that they had pulled down an impressive $13 million in seed funding to launch their upcoming P2P insurance carrier. The round was led by venerable VCs Aleph and Sequoia Capital.
Heading up Lemonade are an impressive co-founding duo of CEO Daniel Schreiber and CTO Shai Wininger. Schreiber comes to the venture after having served as the president of mobile charging technology company Powermat. Wininger is well known for his mark on the internet marketplace as a founder of Fiverr.
The company is based in New York City.
What would P2P insurance look like?
Beyond their statement that they will offer peer-to-peer insurance services, Lemonade continues to hold their cards very close to their chest.
“As a fintech-insurance company, Lemonade is designing around the bureaucracy and conflict that haunt the industry, replacing them with technology and transparency,” says Schreiber in their statement to the press. “What makes this exciting is that it requires reinventing the very structure and business model of insurance in ways not available to the legacy insurance carriers.”
The company has told Geektime that they are looking to disrupt the insurance industry, noting that the model of insurance is due for a reexamination, and are essentially hoping to shake it to its core with their new model. They are looking to the examples set by companies like Uber and Airbnb who have created new structures through the sharing economy.
“The companies today operate based on denying claims,” Geektime was told in a phone interview. “When you see the kinds of margins like the $1 trillion in property and casualty insurance, you see that there is room here for disruptions.”
The concept of P2P has been growing in recent years, slowly making its way into the Fintech sector with lending finding particular success.
Is Lemonade sweet or sour?
It is worth noting first off that the sheer size of the investment here is extremely impressive. Without many details as to how the company plans to reshape this field, most indicators point to the co-founders’ track record as being a primary mover for the investors. In particular, this is one of Sequoia’s largest seed rounds in their history, adding to its significance.
“I’ve known Lemonade’s founders for years, and we’re thrilled to be part of their journey from the very start. I can think of no entrepreneurs better equipped to reinvent insurance.” said Michael Eisenberg, Founding Partner at Aleph. “Daniel and Shai are on a mission to deliver a wake up call for the industry, and a refreshing experience to consumers worldwide.”
While companies like Sirin and Whipclip with their seed rounds of $25 and $16 million respectively have achieved higher, the $13 million figure will demand attention from investors worldwide.
The company has said that they will start releasing more details on their model sooner rather than later, but in the meantime, far too many questions are left unanswered. Insurance by its nature incurs a large amount of risk. One would imagine that the way that the traditional companies stay in the black is by working on volume, as well as in denying as many claims as they can get away with.
There are already other companies like Friendsurance who claim to be working in this field, but without reviewing Lemonade’s business model, it is difficult to draw conclusions as to how they plan to differentiate themselves at this point.