Member Spotlight: Dealroom
What services does Dealroom provide?
At its core, Dealroom is a data platform providing private market financial data on start-ups, high-growth companies, tech ecosystems (funding, valuations and jobs created in a specific line of technology business) and investment strategies. Dealroom also produces research content and thought leadership pieces. Our content includes regular quarterly and annual reports in various industries, including fintech, insurtech, climate tech and deep tech (novel scientific or engineering breakthrough for the first time to form a new product), we also produce regional reports which can cover continents or even some cities.
My official title is Thematic Lead, which means I focus on researching the technology sector for VCs and corporates. My research remit includes climate, deep and space tech as well as fintech, insurtech and crypto markets. My activities include research and content production, managing Dealroom’s platform data quality and scoping partnerships and new products.
Who are Dealroom’s customers?
Dealroom’s customers generally fit into five business areas. Firstly investors, particularly those involved in venture capital (VC), use Dealroom to source deals, perform due diligence and monitor investment trends. The second is organisations that use Dealroom to scope potential start-up customers. Next are accelerators, governments or companies that build capabilities for specific businesses or regions; they can use Dealroom to scope out local start-ups that may be eligible for grants or inform policymaking. Another group includes universities and corporates, those that are keen to monitor financial and innovation trends in specific industries. Finally, there are the companies themselves who use Dealroom to find investors or monitor their competitors and industry trends.
How are these customers using Dealroom’s data and services?
A variety of customers means we have various use cases. For example, venture capitalists (VCs) can use Dealroom data to identify promising startups based on growth metrics, founders geography, or specific sectors to validate their investment theses. Investors can use this filtered data to create personalised searches and alerts, heatmaps or export to Excel. Customers can also pull the data directly into their systems via API, enabling more sophisticated searches and inputs straight into customers’ internal databases and systems.
We also have more niche use cases outside of our main customer groups. For example, property managers have used Dealroom to monitor their portfolios. These managers have access to business’ locations and ESG-related goals, such as water sanitation, city sustainability and energy efficiency. Property managers use this data in their decision-making process for property service providers.
You are writing Dealroom’s upcoming report, The State of Global Insurtech, what topics will you be covering?
This report will cover the start-ups in, and the general state of, the insurtech market globally, including high-level funding trends and valuations. This includes some private-to-public activity, such as exits and ‘unicorn births’ (private companies which reach a valuation of £1 billion). The report will be published before the ITC DIA Europe conference (28-29th June 2023) and will be presented at the event.
We will also feature sponsored content from Generali, Mapfre, Mundi Ventures and NN Group. For example, Mapfre will cover how to expedite the claims management process, including using AI to automate parts of the claim journey. We are also planning to discuss the human-in-the-loop approach where algorithms flag a lack of confidence to a human user for them to check. Our section with NN also covers operational efficiency, discussing how efficient distribution can be achieved when using multiple distribution channels and what this means for back-end architecture. The case study with Generali will look at generative AI, particularly looking beyond the hype to understand what is really new and what is a repackaged old model. Mundi Ventures will bring their investors’ expertise in insurtech with insights on the state of the market and the opportunities for insurtech startups.
In your report you mention the decrease in VC activity, why do you think this happened?
It is important to contextualise the drop in insurtech funding with the current decrease across the board in VC funding. There is a lot of uncertainty across the VC system given external economic factors.
However, the insurtech market is amongst those hardest hit. We believe this is partly due to the number of start-ups entering the mainstream in 2020 and substantially scaling up, with a few even going public. Today, these insurtech players’ performance has been suboptimal when considering the capital invested in them. This has led to falling valuations and trading at multiples lower than incumbent players. These events have created a lot of uncertainty surrounding insurtech investment and put off some investors, even if only a few players have been negatively impacted.
Insurance start-ups can vary a lot creating differing risk profiles. For example, there can be more risk associated with investing in a start-up MGA because these businesses can face financial losses should insurers choose to scale back their capacity provision. In contrast, the technology and data provision side of the market can be seen as more stable and resilient in challenging market conditions. But opportunities exist in both areas.
How does the decrease in VC activity compare to what we see in mergers and acquisitions (M&A)?
We have seen greater M&A activity. Interestingly, most M&A movement has not come from insurers. Instead, we are seeing industry consolidation with larger insurtechs buying other start-ups to fill provision gaps or entrench their market position. Another alternative to VC activity has been private equity (PE) firms taking advantage of low valuations to buy public companies at a lower price, turning them into private businesses again or directly acquiring private startups.
What success stories have we seen come out of Q3/4 2022 and Q1 2023?
There have been some players who have managed not to downsize their valuations in 2022 and 2023. This success has been across geographies and sub-sectors within insurtech. We think this is a promising signal for start-ups as it demonstrates that there is still opportunity for growth if a business can show efficiency and a clear path to profitability.
Are there particular regions with strong growth in insurtech investment over 2023?
There has been strong insurance premium growth in the Indian Subcontinent and Southeast Asia as products are being developed to close the underinsurance gap in these regions enabling more people to buy insurance, sometimes for the first time. As a result, a strong insurtech scene has emerged and is building traction.
What does this show about opportunities for future investments?
Insurtech is a less mature market than the larger fintech ecosystem. Alongside VC under capitalisation, this means that there is plenty of opportunity for insurers, investors and corporates to invest in these start-ups. Additionally, insurtech investment has gone global; Europe and the US are no longer the only geographies creating new growth opportunities.
For those interested in Dealroom’s report launch at ITC DIA Europe please visit: https://www.digitalinsuranceagenda.com/events/itcdia-europe/home/