Israeli unicorn Next Insurance raises $265 million in funding, with same valuation since 2021
Israeli unicorn Next Insurance raises $265 million in funding, with same valuation since 2021
The latest funding round is the largest in the company's history and brings the total amount raised by Next to approximately $1.1 billion since its founding.
Israeli insurtech unicorn Next Insurance has raised $265 million in its latest funding round, with investments from insurance giants Allstate and Allianz X who are entering into a partnership with the company. This funding round - the largest in the company's history - brings the total amount raised by Next to approximately $1.1 billion since its founding. Previous funding rounds included TLV Partners, Group11, FinTLV, Battery Ventures, Capital G, Munich Re, and private investor Oren Zeev. In the current funding round, there is no debt component and the entire sum will flow into Next's coffers for business expansion.
While in the past the company boasted about increasing its valuation, Next has refrained from mentioning its valuation during the current funding round. According to Calcalist's investigation, their valuation is the same as during their previous funding round at the beginning of 2021, which was $4 billion. While this isn’t considered a "down round," meaning a funding round at a lower valuation than in the past, it does reflect the spirit of the times with lower revenues and slower growth compared to the boom years. Since its $250 million funding round in March 2021, Next dramatically increased its revenue from about $200 million in 2020 to $800 million in 2022, primarily through the acquisition of American company AP Intego in a deal estimated to be hundreds of millions of dollars. However, this increase in revenue is not reflected in the valuation.
Next specializes in insuring small and medium-sized businesses in the U.S., a market where major insurance companies are absent. The current investment by American insurance giant Allstate is strategic, and they will begin marketing Next's insurance on their platform. The two companies are expected to develop a new product for commercial auto insurance. Despite the recent slowdown in Next's valuation growth, it is still one of the major unicorns in Israel and one of the leading candidates for an IPO on Wall Street in the next two years. However, the entry of Allstate, one of the largest insurance companies in the U.S., into a strategic partnership with Next may signal their intention to acquire it in the future.
Next Insurance was founded in 2016 by CEO Guy Goldstein, Chief Growth Research Officer Alon Huri, and CTO Nisim Tapiro. Since a round of layoffs last year reducing its workforce by 17%, Next today employs 700 people, compared to 900 at its peak, with 180 at its R&D center in Kfar Saba. According to Next, they recently crossed a significant milestone of 500,000 active customers in the U.S. across 1,300 types of businesses. The company's platform, based on artificial intelligence and machine learning, processes requests within 10 seconds and provides a policy proposal tailored to the risk level, location, and other elements of the business. This saves customers from unnecessary payments or, conversely, having inadequate coverage, which could prove to be a critical mistake when needed.
"The funding is expected to help us continue to grow and improve profitability. According to our estimates, in a few quarters, we will already become profitable after recently growing by a lot," says Alon Huri. According to him, Allianz X's participation in the funding will allow Next to improve its terms with Allianz Re, one of the largest reinsurance companies globally, which will also contribute to the financial stability of the Israeli company.
Although the funding round was completed before the outbreak of the war in Israel, Huri says that Next has not been affected, except for employees who have been drafted for reserve duty. "We are completely an American company with an R&D center in Israel. The war, of course, affects people, and these days are challenging for all of us, but it has no impact on Next's business."
