North American and European insurtechs are recalibrating after a blockbuster 2021

How much difference a year makes.

In April 2021, TechCrunch published a venture capitalist’s take that “the era of the European insurtech IPO will soon be upon us.” At the time, the perspective made some sense.

After all, just last June, this column explored the rapid-fire fundraising in the insurance technology startup market, declaring that “insurtech is hot on both sides of the Atlantic.” At the time, WeFox had recently raised a $650 million round, putting big points on the board for European insurtech.

Since then, we’ve seen the technology market correct and public-market investors spit up the insurtech IPOs from late 2020 and early 2021, essentially repricing the value of neoinsurance companies to near zero if we deduct cash from their market caps.

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The change in sentiment led The Exchange to ask in February which insurtech startups might thrive this year and which might suffer. Since then, tech stocks, including the most recent insurtech IPOs, have continued to correct, bleeding value across the Nasdaq and NYSE.

Now, roughly a year past when it seemed a period of hyperactivity was going to send a host of European insurtechs to the public markets, we’re examining just how different the market is. With venture capital data collected for TechCrunch by PitchBook and notes from active insurtech venture capitalist Florian Graillot of Astorya.vc, we now know a lot more.

While the 2022 data tells a stark story, the rest of Q2 could prove pivotal for insurtech this year. Let’s explore insurtech activity in both North America and Europe, compare recent results and look at what could lie ahead.

How insurtech investing has changed this year

The optimism around insurtech outcomes last year fits neatly with the data that we can now see with the benefit of hindsight.

In North America, PitchBook reports that insurtech venture capital activity rose to $2.21 billion across 83 rounds in the second quarter from $1.67 billion across 78 rounds in Q1 2021. It peaked in Q3 2021 with $2.51 billion invested in 66 deals before falling to $1.80 billion in the fourth quarter of 2021 and to $1.52 billion in the first quarter of 2022.

The number of deals also slipped to just 54 in the first quarter of 2022 from 67 in Q4 2021.

Insurtech’s story in Europe has been a little different. Investment has been largely flat from Q1 2021 through the first quarter of 2022, per PitchBook, with one exception: the second quarter of last year.

Apart from Q2 2021, European insurtech investments mostly floated between $450 million and $550 million from the start of last year through the first quarter of 2022. In Q2 2021, however, some $1.76 billion was invested across 57 rounds, setting a both deal and dollar peak for the recent past. (More shortly on why Q2 2021 is key to understanding insurtech’s future in Europe.)