InsurTech Lemonade Looking to Raise $286 Million in IPO

UTC by Teuta Franjkovic · 3 min read
InsurTech Lemonade Looking to Raise $286 Million in IPO
Photo: Pixabay

Lemonade, which filed to go public earlier in June, announced on Thursday a price range of $23 to $26 for its public offering. The updated regulatory filing could mean a significant valuation hit for the insurtech firm.

Insurance startup Lemonade Inc., which is backed by SoftBank Group, announced it seeks to raise up to $286 million in its U.S. initial public offering (IPO). The thing is though, the latest coronavirus outbreak (as well as the second wave fears) put many debuts on hold so the succession of this IPO is pretty much questionable.

On the other hand, there is a tepid wishing present regarding the new stock offerings so the investors could be hungry for the Lemonade’s public listing as well. From the company, all hopes go to these investors who are investing in online-focused business believing that this could be a safe haven amid the pandemic.

Just for example, earlier this month, an online used car seller Vroom Inc. raised $467.5 million in its IPO, and its shares more than doubled in their worth during the debut.

Lemonade to Sell 11 Million Shares in Its IPO

According to the regulatory filing, Lemonade has plans to sell 11 million shares in the IPO and has set a target range of $23-$26 per share.

Also, let’s not forget to count on an extra 1.65 million shares that it will make available to its underwriting banks. In that way, the company’s fundraise increases to $291 million to $328.9 million. If we include shares offered to underwriters, Lemonade’s implied valuation given its IPO price range runs from $1.30 billion to $1.47 billion.

The New York-based company started with its work back in late 2016 and is part of a growing number of young companies looking to disturb the insurance sector with a little help of technology utilization.

The company noted it has digitized the whole insurance process, reinstating brokers and paperwork with algorithms and administering policies in only 90 seconds and claim payments in three minutes.

Last year, it managed to raise $300 million in a funding round led by Japan’s SoftBank, which also involved insurer Allianz SE , Alphabet Inc’s venture capital arm GV, General Catalyst, OurCrowd and Thrive Capital.

The company also plans to list its shares on the New York Stock Exchange under the symbol “LMND.”

Goldman Sachs Inc (NYSE: GS), Morgan Stanley (NYSE: MS) and Barclays Plc (LON: BARC) are among IPO underwriters.

Be it as it may, this will get Lemonade a long waited (and needed) boost. Lemonade, which by the way is a user of AI chatbots in order to sell insurance plans to renters, car owners, etc., reported a net loss of $108.5 million in 2019, more than double its 2018 losses. In the meantime, revenue rose three-fold in the same span from $21.2 million to $63.8 million.

Lemonade’s prospectus warns:

“We have a history of losses and we may not achieve or maintain profitability in the future. We expect that our net loss will increase in the near term as we continue to make such investments to grow our business.”

On the other hand, the company’s benefactors say there’s a $5 trillion annual market opportunity in just pulling insurance out of the dark ages.

Read other IPO news on Coinspeaker.

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