Nine years ago, Daniel Schreiber and Shai Wininger (one of the founders of Fiverr) decided to set up an insurance company. The two tech entrepreneurs had no insurance experience, but how hard could it be? Armed with tech, they would storm the world with their new take on insurance. By 2017, they had raised $180 million, and in the next two years they raised another $300 million, and on July 1, 2020, they listed their new creation.
They called their new creation Lemonade, branded it bright pink (which gave them a legal fight with T-Mobile when they expanded into France) and went hard after the millennial market with chatbots and AI-based underwriting.
And for the next four years, every year, without fail, the company burned through its cash pile.
Lemonade’s latest results, released last week, just added to its share price carnage (now more than 70% down from its peak) but, according to Schreiber (who is the company’s CEO now), they were actually good news, and the company plans to increase spending, in at least some sectors at least.
“Ours … is a business that grows in profitability as it grows in scale – and so grow we must. That’s why we plan to roughly double our growth budget in 2024, from the $55 million spent in 2023,” Schreiber said last week.
$140 million in funds for customer acquisition (CA) in 2024 have already been secured from venture capital firm General Catalyst which funded Lemonade’s $150 million CA spend from June to December 2023.
Despite the share price mayhem, Shreiber is upbeat, telling the Financial Times over the weekend that Lemonade’s 2023 results (a less than significant $3 million increase in cash and investments over the last half of the year to a total of $945 million) are proof that all the forecasts of his company’s demise are, at the very least, premature.
“We are not burning through it, our cash levels are going up, so I think a lot of the questions about survivability . . . ought to have been put to bed,” he told the FT. He also said that net cash flow was expected to turn “consistently positive” in the first half of next year.
Schreiber may have a basis for his optimism - during the fourth quarter, Lemonade’s operating costs fell 5% year on year while premiums grew 20%. He is convinced that these figures show the benefits (and potentially exponential increase in profits) that a business built around AI and chatbots can offer.
Lemonade forecasts its first profits in 2026.
USA
Renters, Condo, Co-op, Homeowners, Life, Pet health insurance.
France
Renters
Germany
Contents and Personal Liability
Netherlands
Contents and Personal Liability
UK
Contents insurance
