Lemonade Competitor Hippo Raises Capital at $1.5 Billion Value
(Bloomberg) -- Hippo Enterprises Inc., hot on the heels of rival home insurance technology business Lemonade Inc. going public, has closed a $150 million financing round.
The Palo Alto, California-based startup is valued in the investment at $1.5 billion, according to the company. New investors Dragoneer and Ribbit Capital joined existing investors like Felicis Ventures and Iconiq Capital in the financing.
Hippo, which was valued at about $1 billion in a funding round last year, is preparing for a potential initial public offering, said Chief Executive Officer Assaf Wand.
“In 2021, we’ll be ready to go public,” he said.
Lemonade, a homeowner insurance provider backed by SoftBank Group Corp., has seen its stock almost triple since going public this month. Last year, fellow insurance technology firm Assurance IQ Inc. was bought by Prudential Financial Inc. That $2.35 billion deal included the potential for an additional payment of as much as $1.15 billion in cash and equity.
Wand said that the terms of Hippo’s financing round had already been set before Lemonade’s IPO.
“It started 3 1/2 months ago when the world was really really shut down,” Wand said, adding that investor pitches were harder via video. “It’s very difficult for me as a founder to intervene to read the room.”
Enough investors signed on, though, bringing the total capital raised to $359 million since Israeli-born entrepreneurs Wand and Eyal Navon started the company in 2015.
In some respects, the pandemic has helped Hippo’s business, especially homeowner insurance policies.
“Because interest rates were so low, we see a surge of people that are refinancing their mortgage,” Wand said. “People are buying homes like crazy now.”
Hippo is on track for more than $100 million of revenue in the next year, according to Wand. Hippo’s goal is to have “a clear path to profitability” by next year when it expects to be ready to go public, he said.
Hippo sells policies in 29 states, after working to get regulatory approval from those state insurance watchdogs. It struck a deal in June to buy Spinnaker Insurance Co., giving it an insurance carrier while still allowing it to have a portion of its premiums underwritten by other insurance partners.
Insurance technology firms have continued to rake in funds, with $912 million raised globally by those companies in the first quarter of 2020, according to a report from Willis Towers Watson Plc.
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