Insurtech company Lemonade seeks to hold an IPO at a valuation of $1.1 billion before money, according to the company's updated prospectus. How much money will be raised and the company's valuation after money will depend on how many shares it eventually issues. Initially, it will issue eleven million shares at a price of $23-26, for a total of $253-286 million. The new shares will represent 20% of the company, making its valuation after money $1.35 billion at the average price.
The underwriters have an option to offer 1.65 million more shares. If the option is exercised, the amount raised will increase to $290-330 million. The eventual offer price could be higher or lower than the range cited.
The prospectus also reveals the holdings of each of the current shareholders.. Founders Daniel Schreiber and Shai Wininger hold 8% and 9% respectively (6.4% and 7.2% after the offering), which means that their stakes are worth $86 million and $97 million respectively. Softbank holds 27% (21.8% after the offering); venture capital firms Sequoia Capital and Aleph hold 10.3% each (8.3% after the offering); General Catalyst holds 7.3% (5.9%); and XL Innovate holds 5.2% (4.2%).
Lemonade's prospectus reveals that 2019 revenue was $67.3 million, up 200% from 2018. Revenue totaled $26.2 million in the first quarter of 2020, compared with $11 million in the first quarter of 2019. Marketing and sales expenses represent 50% of the company's expenses and in 2019, Lemonade made a net loss of $108 million - 1.6 times its revenue. Another major expense is reinsurance to reduce risk, representing 25% of its overall expenses of $175 million in 2019.
Lemonade is an insurance company based on big data and AI. The company began operations in New York in 2016 and has a license to operate in most US states. Last year, Lemonade also entered the European market.
Lemonade claims it can collect 100 times more data than a traditional insurance company and that this enables it to be cheaper and more efficient and more precise in pricing policies. Its algorithms also enable it to check policies and prevent fraud, and to pay out a large number of its claims within seconds of receiving them.
Published by Globes, Israel business news - en.globes.co.il - on June 25, 2020
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