What can we decipher from the latest wave of dollars crashing into the insurance technology market?

In the wake of insurtech unicorn Root’s IPO, it felt safe to say that the big transactions for the insurance technology startup space were done for the year.

After all, 2020 had been a big one for the broad category, with insurtech marketplaces raising lots, rental insurance startup Lemonade going public, Root itself debuting even more recently on the back of its automotive insurance business, a big round to help Hippo keep building its homeowners company and more.

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But yesterday brought with it even more news: Metromile, a startup competing in the auto insurance market, is going public via a blank-check company (SPAC), and Hippo raised a huge, unpriced round.

So let’s talk about why Metromile might be plying the public markets, and why Hippo may have have decided to pick up more cash. Hint: The reasons are related.

A market hungry for growth

The Lemonade IPO was a key moment for neoinsurance startups, a key part of the broader insurtech space. When the rental insurance provider went public, it helped set the tone for public exit valuations for companies of its type: fast-growing insurance companies with slick consumer brands, improving economics, a tech twist and stiff losses.

For the Roots and Metromiles and Hippos, it was an important moment.

So, when Lemonade raised its IPO range, and then traded sharply higher after its debut, it boded well for its private comps. Not that rental insurance and auto insurance or homeowners insurance are the same thing. They very most decidedly are not, but Lemonade’s IPO demonstrated that private investors were correct to bet generally on the collection of startups, because when they reached IPO-scale, they had something that public investors wanted.