NEXT Insurance co-founder and CEO Guy Goldstein played down the likelihood that the insurtech would go public, saying the start-up is more focused on growing its business right now.
Founded in 2016, NEXT provides general and professional liability insurance to more than 200,000 small businesses, such as restaurants, beauty salons and even personal trainers. Its policies are backed by Munich Re.
Like all insurtechs, NEXT is completely digital, with quotes available in less than 5 minutes, according to its website. And the Palo Alto, Calif.-based company aims to resolve claims within 48 hours.
NEXT is widely considered to be the next insurtech to go public. Several insurtechs produced some of the most sought-after IPOs of 2020; many have soared in the aftermarket. Lemonade (ticker: LMND) is up 217% from its $29 IPO price, while
Duck Creek Technologies
(DCT) has jumped 65% from its $27 offer price, and
(MAX) shares have risen 95% from its $19 IPO price. Root Insurance (ROOT), however, has never traded above its $27 offer price. Oscar Health (OSCR), the most recent insurtech to go public, has yet to trade at its $39 IPO price.
Other insurtechs, like Hippo Enterprises and Metromile (MILE), have opted to merge with special-purpose acquisition companies to go public. “There is a lot of news about IPOs and SPACs and while nothing is off the table and we’re always evaluating our options, our focus remains on growing the business and continuing to innovate on our products and services so we can best serve small businesses across the country,” Goldstein said.
Last week, NEXT raised $250 million in a round of funding that valued the start-up at $4 billion. FinTLV Ventures and Battery Ventures led the Series E, with participation from CapitalG, Group 11, Zeev Ventures, Founders Circle and G Squared. NEXT, in all, has raised $881 million.
“Our objective is to become the Geico of small business. We want to capture the entire market,” said Goldstein, estimating the total addressable market at $140 billion. “We need to invest a lot of money in order to make the product available to customers.”
NEXT is one of several insurtechs looking to reinvent the insurance industry, which has lagged behind in embracing technology. Insurance for small businesses is very fragmented, Goldstien said. There is no clear leader in the space; instead there are hundreds of smaller insurance providers, he said. “That’s what is giving us the opportunity to become the leader,” he said.
NEXT is 30% cheaper than general carriers, Goldstein said.
NEXT employs about 600 people. The insurtech wants to add staff in all of its offices, including Austin, Texas, and Israel, Goldstein said. “We are still growing fast and [will be] looking for employees to join us,” he said.
Write to Luisa Beltran at [email protected]
Corrections & amplifications: NEXT Insurance raised $881 million in a round of funding. A previous version of this article incorrectly said the company raised $880 million.