From a group of insurance market startups raising capital earlier this year, to neo-insurance provider Lemonade going public this summer with strong valuation, the huge new round of Hippo and the upcoming IPO of the unicorn of Root, 2020 proved to be a busy year for startups and other growing insurance-focused private tech companies.
That news cycle continues to this day, with The Zebra announcing that it has reached an execution speed of around $ 100 million and, perhaps even more notably, that it has become profitable.
ProWellTech recently covered the start of the auto and home insurance market in February, when it raised its first $ 38.5 million in a $ 43.5 million C-series led by Accel. As we noted at the time, the startup joined "Insurify ($ 23 million), Gabi ($ 27 million) and Policygenius ($ 100 million) in raising new capital this year."
The zebra published a number of financial performance metrics as part of its Series C cycle, including the fact that it posted revenue of $ 37 million in 2019 and achieved an annual execution rate of $ 60 million over the period of the its C series could double in size this year, taking it above an operating rate of $ 100 million by the end of 2020.
With that story in hand, let's talk about the company's most recent performance.
An evolving market
According to the company, The Zebra posted net sales of $ 6 million in May 2020. That number grew to around $ 8 million in September. For those of you able to multiply, $ 8 million by 12 is $ 96 million, or a hair under $ 100 million. According to a phone call with Keith Melnick, CEO of The Zebra, the company's September month was very close to $ 8.3 million, a figure that would put it on a $ 100 million rate.
Given that our $ 100 million ARR club has a history of giving startups a little leeway when it comes to their size, it seems perfectly correct to claim that The Zebra has hit a $ 100 million revenue ladder; at its current rate of growth, although the final September revenue tally is a little light. the company is expected to reach a peak nine-figure pace in October.
According to Melnick, while most of The Zebra's revenue is non-recurring, a growing portion is. According to the CEO, roughly 2-5% of The Zebra's revenues were recurring last year, a figure he says is about 10% today. (If The Zebra binds an insurance policy itself and that policy is renewed, its fees may reappear.)
What drove the company's rapid growth in 2020? In part, the insurance market has changed, with insurance networks dependent on in-person sales seeing their ability to drive business slowly thanks to COVID-19. Insurance markets like The Zebra have stepped in to assist, helping move some of the offline demand online. Melnick detailed that dynamic to ProWellTech, adding that when some advertising channels saw demand decline, his company was able to leverage inexpensive inventory.
It appears that a number of factors have added to The Zebra's rapid growth so far in 2020. Our next question is whether other related players in the insurtech startup space have seen a similar acceleration. We will talk about it in a few days.
Finally, regarding The Zebra, the company said it is now profitable. Of course, profit is a tricky word in 2020, so we wanted to know exactly what the company meant by the statement. According to the company's CEO, it is generating positive net income, the gold standard for profitability as the metric includes all costs, including non-cash expenses that startups tend to cut out of their numbers to make the better results than they really are.
If other players in the insurtech space are navigating similar trajectories, all that capital that went into the industry earlier this year will look prescient.
