Overlook’s Kabir expects near-term liquidity events for insurtech LPs to drive further investment

By James Thaler

June 24 - (The Insurer) - The bar for (re)insurance firms deploying capital to insurtech venture funds has become “extremely high”, said Overlook Ventures founding partner Amir Kabir, who added that near-term liquidity events should drive more investment from strategics.

“When you were looking at companies, let's say, 10 years ago, you would look at the founding team and be like, 'Wow, incredible team, great talent, deep understanding of market, interesting prototype (development) build. Let's invest at the earliest stages,” Kabir told The Insurer TV at this month’s Insurtech Insights USA conference in New York City.

Kabir, who previously worked at Munich Re Ventures and AV8 Ventures, said insurtech founders need to demonstrate a viable path to generating meaningful, sustainable recurring revenue to get funded at the pre-seed and seed stages.

“Proprietary go-to-market is much more important than product-market fit or tech,” he said, adding that an insurtech just having its product piloted by one prospective customer is insufficient to attract funding.

INSURTECH FUND LPs

Despite dampened sentiment around insurtech venture investing, Kabir said incumbent (re)insurance companies could potentially allocate more capital to the sector in the coming quarters as insurtech sales and funding rounds create more liquidity events.

“But it is evident that if you want to start a VC fund and you're looking for (limited partner) money, the bar is extremely high, and LPs want to see evidence of why is this different?” Kabir added.

Kabir said that incumbent industry investors are scrutinising more closely the amount of capital they allocate to the specialist insurtech venture funds.

“It's quite interesting, because that's what we do on the VC side, right? When we talk to founders it's, like, ‘Why are you the guy to do it? What is so different in the product? Who are your customers?’ The same is happening, or has happened, on the VC fund side,” he said.

Asked whether a pullback among specialist insurtech venture funds is creating opportunities to secure better deals when investing in insurtechs, Kabir said that great founders and great startups are always able to attract funding, citing an example of one recent investment which was offered 10 term sheets and had a round that was oversubscribed by $15 million for a $5 million raise.

“Obviously, it depends on the market you're going after. Right now, it's much harder, even if you have revenue, even if you have some sort of proprietary product-market fit there … but if it's on the traditional venture (or) software side, and the stuff that has been funded for a long time, if you're a great company, you will be oversubscribed,” he added.

A new dimension is increasing interest from incumbent carriers in acquiring insurtech MGAs, Kabir said, adding: “They actively are looking at acquisition specifically on the MGA side.

“So, I think that shows you that incumbents are ready to move … and they see the value of picking up the small players, or maybe whatever distressed companies are out there.”

Watch the full interview with Overlook Ventures’ Amir Kabir to hear more on:

• How the bar for incumbent (re)insurance firms investing in venture funds has soared

• Why near-term liquidity events for LPs will drive more investment in insurtech

• A growing trend among strategic acquirers looking to buy insurtechs