Wheelings and Dealings: Lemonade P2P Insurance Startup Secures Massive Seed Funding
December 09, 2015
Two technology entrepreneurs are breathing life into the United States property/casualty insurance industry with a new company named Lemonade, which uses an innovative peer-to-peer (P2P) business model that will certainly upset the industry’s current structure and bureaucracy. Lemonade was founded by Daniel Schreiber, former president of wireless charging company Powermat, and Shai Wininger, a co-founder of the online marketplace Fiverr.
The startup recently secured $13 million in an initial funding round thanks to Sequoia Capital (News - Alert) and Aleph Ventures, an impressive amount of investment that is even more surprising for the insurance industry. Although the specifics regarding Lemonade’s business model and product offerings are still under wraps, the company’s founders promise that it will be a completely new approach to insurance that focuses primarily on the customer and giving them a positive experience. Under the current business model used in the industry, insurance companies make money primarily by rejecting customers’ claims; Lemonade aims to take a more modern perspective and make money by keeping its customers happy.
“It is very unusual for a company to receive $13 million in an initial round of funding,” commented Haim Sadger, partner at Sequoia Capital. “But it is rarer still to find such accomplished founders tackling such a sizable industry with such a compelling solution.”
The company is using its massive funding to hire technologists, designers, actuaries and a range of insurance professionals, most of whom have been estranged from the industry due to their progressive viewpoints. Furthermore, Lemonade is working with regulators in New York to ensure it is a fully licensed insurance carrier that maintains compliance with all relevant legislation.
Although Lemonade is the first such company to start in the United States, there are three other P2P insurance ventures around the world: friendsurance in Germany, Guevara in the United Kingdom and TongJuBao in China. These companies have achieved moderate success, even though some operate as brokers and not carriers, but Lemonade’s founders intend on moving beyond a loyal customer base and completely transforming the industry landscape beyond recognition. The company will reportedly launch within the next few months and the mysterious nature of how it will accomplish this feat will finally be revealed.
Edited by Peter Bernstein