TechCrunch: SoftBank leads a $120 million investment in Lemonade
The SoftBank Group has finally made a good tech investment around real estate.
After investing $4.4 billion in what is essentially a bespoke office space rental business (WeWork) and another $450 million in Zillow for rich people (Compass), the gargantuan Japanese tech investor is leading a $120 million round of funding for Lemonade, a startup providing renters and homeowners insurance.
Additional investors in the round include previous backers Alphabet’s investment firm, GV, General Catalyst and Sequoia Capital.
Insurance is a pretty tricky business that depends on a lot of data science to right-size coverage — and Lemonade is one of the first completely new entrants in the market to design a soup-to-nuts insurance business for the smartphone era.
Much of what the company does is automated by chatbots or managed by algorithmically enhanced policy management tools (I hesitate to say AI-enabled, because these things aren’t intelligent, they just process data well).
That can help keep costs down for the company, but Lemonade also depends on a business model innovation that purports to keep its customers more honest when filing claims. When they enroll, policyholders all select a charity through the app to which they will donate a portion of their unspent premiums at the end of a term.
The idea is that users won’t file unnecessary claims if they know that the money isn’t just going to be kept by a faceless corporate entity and will, instead, support a cause they care about.