Insurtech has had a rocky few years. Several startups in the space raised a lot of money and tried their luck on the public markets, but found that investors were unwilling to grant them valuations on par with other tech companies for just trying to make insurance more efficient.
Indeed, the market seems to demand much more of insurtech players, with former startup darlings seeing their valuations decline sharply (in the case of Hippo), or deciding to sell for a fraction of their former worth (what happened with Metromile).
Insurtech startup AgentSync is taking on the same slice of the economy, but with a very different model, focusing on helping federate information via APIs between different parties. That, it appears, is a more viable model: AgentSync recently raised a $50 million Series B extension, TechCrunch+ has learned. Prior investors led the round, and Craft and Valor returned as lead investors.
The company last raised capital in 2021, adding $75 million to its coffers at a $1.2 billion valuation at the time. The startup declined to share its new valuation.
The new money is great news in this climate, but that’s not to say AgentSync has had an easy time of it. The startup’s CEO and co-founder, Niranjan Sabharwal, told TechCrunch+ that insurance companies have had to wrangle several external forces in recent quarters, including a run of catastrophic events (obviously not a good thing for insurers) compounded by rising labor and materials costs, which have made paying out customer claims more expensive.
As the insurance industry was leaning toward a more conservative stance, AgentSync shook up its own business in late 2022. Sabharwal said the company revised its financial plan, reduced expenses and moved employees around internally to better fit the moment.
Still, the company has continued to grow and is in the right zone when it comes to key SaaS metrics, like the ratio of its customer acquisition costs (CAC) to the long-term value (LTV) of those customers. Traditionally, it’s good for a startup’s LTV to be roughly 3x its CAC, and AgentSync has an LTV:CAC ratio of 3.6x at present, per Sabharwal.
Interestingly, the startup told TechCrunch+ that it was actually not running low on cash when it decided to raise again. So why take on more capital, especially when you have a lower cost profile and winsome sales metrics? Oddly enough, it appears the market required it.