VC Roundtable: Is insurtech investment balanced appropriately?

There is so much more to do on coretech, and technologies that support the backend processes of incumbents. This includes cloud coretech providers like Socotra, and also the no code/ low code startups, which are gaining real traction by putting technology in the hands of the business, not the IT department. We are seeing AI solving real problems. So, I see a lot of tech areas that are still under-invested.

In almost every vertical, we see an increasing population of companies spending ever more on direct-to-consumer outreach while offering relatively undifferentiated product. This has led to some unsustainable CAC (customer acquisition cost) payback times, and long-term value/CAC ratios predicated on some pretty large and unproven future assumptions. There’s no law that says you can’t start the n+1th company buying Google AdWords in a crowded vertical, but we’d argue that the economics are getting increasingly difficult for the last entrants.

Well, if you look at patterns of where capital is being invested, a lot of capital has gone into online distribution channels. We think finding a unique customer acquisition cost advantage is really key to win in that sector, as there is a lot of competition to acquire customers with established digital customer acquisition strategies. We think there is opportunity in segments such as agency tools and technologies (i.e. tech that helps agents run their businesses better), and we have observed less investment activity in this sector.