Lemonade Insurance, a U.S.-based startup founded in 2015 by Israelis Shai Wininger, its president, and Daniel Schreiber, its CEO, has raised $120 million in funding led by Japan’s SoftBank Group, the insurance firm announced Tuesday. The funds are to be used to finance expansion outside of the United States next year, Lemonade said.
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The announcement comes just a year after its product launch as a tech-based insurance company relying on artificial intelligence and behavioral economics. It currently sells insurance in eight U.S. states, including California, Illinois, New Jersey, New York, and Texas.
The latest Series C funding round saw the participation of all prior investors including Google Ventures, Allianz Insurance and XL Innovate. The company did not provide details regarding the company valuation in the latest funding round, but it is thought to be more than $500 million. Lemonade’s global expansion plans would make it one of the few insurance firms in the world with a global presence, Wininger noted.
Softbank has been a leader in investing huge sums in companies that are shaking up traditional industries.
The concept for Lemonade was that, with a fresh brand and through the use of technology, rather than relying on brokers, it could break into the huge and rather staid insurance market.
In contrast to veteran insurance firms, whose profits are dependent on the amounts that they pay out in policyholder claims, Lemonade said that it would take 20% of all premium payments to run the company and designate the rest for the payment of claims. The company’s business model is based on the sale of renters and homeowners’ policies through its app and the use of databases to calculate risk. The company has sold about 100,000 policies at this point, Wininger said.