With Lemonade’s recent IPO (which ended its first day 139% above its listing price), we’ve seen new-age insurance companies go the distance. Novel incentive structures, distribution methods, and technological advances in AI and ML have opened up the doors for numerous new-age insurance products: Metromile (pay-per-mile car insurance) to Clyde (point-of-sale warranties) to Shift Technology (insurance fraud detection and claims automation).

Since the U.S. lockdowns began at the end of Q1, founder and investor perspectives have changed dramatically. Externally, there seems to be less overall optimism around startups. Internally, we’ve been wondering how data can help answer investing questions: What insurance startups, if any, are getting funding during this time? Are smart money investors backing startups during this time? Are the historically active insurance investors investing during this time?

The short answer: Yes, to all of the above.

The caveat: Comparatively, like the entire venture market right now, the insurance space is in a slump.

A Brief Background on our Methodology: The Investor Quality Score

We use our Investor Quality score to rank all the insurtech funding rounds since the onset of COVID-19 in the U.S. Our Investor Quality score measures the historical success of an investor weighted by the amount of risk they take on. From there, we’re able to score a startup’s cap table and specific funding rounds.

We calculated the most active insurance investors since 2010, bucketed into four categories:

• Active Early Stage Players: Techstars (66), Plug and Play (60), 500 Startups (57), Y Combinator (56), Startupbootcamp (29)
• Insurtech- and Fintech-Focused Players: Plug and Play Insurtech (26), Startupbootcamp InsurTech London (20), Global Insurance Accelerator (18), Anthemis Group (17), IA Capital Group (10), Insurtech Gateway (9).
• Institutional Later-Stage Players: Right Side Capital Management (19), Anthemis Group (17), Bessemer Venture Partners (17), Accel (16), Kleiner Perkins (15), Goldman Sachs (15)
• Active Corporate Players: MetLife Digital Accelerator (11), American Family Ventures (10), GV (10), Munich Re Ventures (9)

Additionally, worth noting, the EU Executive Agency for SMEs, which doesn’t quite fit into the four above buckets, popped into this list with 23 unique (grant) investments.

From here, we started on the below analysis.

Post-Lockdown Insurtech Activity

COVID-19 hasn’t stopped top insurtech startups from being funded, but it certainly has dampened the total funding volume. Over the past ~5 months, we’ve seen a dip in the total funding and the number of funding rounds.

Taking Q2 as representative, the number of funding rounds has dropped 34% YoY (from 122 in 2019 to 80 in 2020). From a smart money perspective, however, these rounds have similar levels of investor quality: the average investor quality score has remained at 6.4 throughout Q2 2020 (the 83rd percentile).

While the downtrend in Q2 seems gradual, Q3 downtrend data indicates a steeper slope. The average investor quality score sits at 4.7 going into late August, the lowest since Q2 2012. The current pace of funding rounds puts insurtech on track for its lowest total funding round activity since 2012 (Q3 is on track for 69 funding rounds).

It’s worth noting that the type of rounds being funded has shifted. Since April 1st, 2020, there were 33 Seed and Pre-seed investments, a decrease from 2019 (55 Seed and Pre-seed rounds) and 2018 (76 Seed and Pre-seed rounds). Two possible explanations for this decrease could be venture capitalists’ preferences for doubling down on safer, existing relationships or founder hesitancy in a frothy market. It’s a thread worth pulling on, which we’re actively trying to figure out.

Although Q2 and Q3 data tells a story of relatively lower funding activity, several high-quality insurtech startups closed rounds since the start of Q2. These include:

• Bestow ($50m Series B, 96th percentile) is a tech-enabled life insurance provider. Notable investors include: New Enterprise Associates and Valar Ventures.
• The Helper Bees ($6m Series A, 95th percentile) works with insurers to offer in-home treatment and caregiving services to the elderly. The Helper Bees is backed by Techstars among others.
• Alan ($54.3m Series C, 93th percentile) is a Paris-based health insurance startup, backed by Index Ventures.
• Brightside ($35.1m Series A, 91th percentile) is an employer-provided financial health platform, enabling employees to track and better manage their financial health, backed by Andreessen Horowitz and Comcast Ventures.
• Spruce Holdings ($29m Series B, 90th percentile) provides title insurance and offers tools that improve the title and settlement process. Spruce is backed by Bessemer Venture Partners.
• Clever Care Health Plan Inc ($20m Series A, 90th percentile) offers medicare advantage health plans, connecting patients to a mix of eastern and western medicine providers. Notable investors include: Norwest Venture Partners and Global Founders Capital.
• Sprout.ai ($3.1m Seed, 89th percentile) offers claims automation and fraud detection solutions and is backed by Techstars.
• Angle Health ($4m Seed, 89th percentile) provides health insurance plans aimed at startups, trying to ease the process for small-group health insurance plans. Angle Health is backed by Blumberg Capital and Y Combinator.
• Clyde ($14m Series A, 87th percentile) offers point-of-sale product warranties for e-commerce retailers. Notable investors: Spark Capital and RRE Ventures.
• Tomorrow Health ($7.5m Seed, 87th percentile) works with insurance carriers to provide in-home product-based solutions (e.g. wound care, respiratory devices), similar to The Helper Bees. Tomorrow Health is backed by Andreessen Horowitz and BoxGroup.
• Oscar Health ($422.5m Venture Round, 86th percentile) is a tech-enabled health insurance provider. Oscar is backed by Thrive Capital, General Catalyst, and Khosla Ventures.
• Kin Insurance ($35m Series B, 85th percentile) is a tech-enabled home insurance agency, backed by Commerce Ventures and QED.

Other high-quality investments include: Tower IQ, Hippo Insurance, and States Title.

Interestingly, the most historically active insurance investors lack participation in the above deals. Only 28 of the top 50 insurtech investors have made an investment since April 1st, 2020. Plug and Play was the most active investor during this time, investing across Monk.ai, Aniline, Just Auto Insurance, and Evertas. The next most active investors during this time were Alma Mundi Ventures (Omocom, agentero, Fixico) and Global Founders Capital (Clever Care Health Plan, SingularCover, Lingxi).

As for the more institutional players, we saw American Family Ventures back Branch Financial (an online home insurance agency), Insurtech Gateway back By Miles (pay-per-mile car insurance) and honcho (reverse auctioned car insurance), and Munich Re Ventures back Bought By Many (pet insurance).

At Radicle, we’re actively monitoring the insurance space. Questions like How are investors and founders approaching the insurance landscape in this new environment? are those that we seek to answer. In the coming weeks, we’ll have interviews with investors and founders in the space to get insights into the shifting insurance landscape.

If you’re interested in learning more about how the Investor Quality Score can help you prioritize where to focus or about our work in insurance, contact harry@radicleinsights.com.

Insurance Tech in Q2/Q3 2020: Where Smart Money Investors Are Placing Their Bets was originally published in Radicle on Medium, where people are continuing the conversation by highlighting and responding to this story.

On Monday, we launched the Rad 30 Crypto Composite that tracks 30 crypto assets not named Bitcoin or Ethereum. Later in the week, on Wednesday, Bloomberg (in partnership with Galaxy Digital Capital Management) launched the Bloomberg Galaxy Crypto Index (BGCI) that tracks 10 of the largest crypto assets by market cap.

There are some key differences between the two approaches:

1. The BGCI tracks 10 of the largest crypto assets. The RAD 30 tracks 30 varied crypto assets.

The top crypto assets by market cap present a very specific view of decentralization. The BGCI effectively tracks two sectors:

• Cryptocurrencies and Store-of-Value Coins (Non-private: Bitcoin, Bitcoin Cash, Litecoin, Ripple; Private: Dash, Monero, Zcash)
• dApp Ecosystems and Smart Contract Platforms (Ethereum, Ethereum Classic, EOS)

These crypto assets are undoubtedly important. They do not, however, offer an understanding of how crypto is impacting the diverse set of industries in which it is being deployed and explored. The RAD 30 excludes BTC and ETH. The RAD 30 tracks assets drawn from 10 (decentralized) sectors:

• Advertising
• Crowd Capital Allocation
• Distributed Cloud Computing
• Ecommerce
• Energy
• File Storage and Sharing
• Financial Services
• Healthcare
• Insurance
• Social and Digital Media Networks

We believe both approaches are important and valuable. One offers concentration; the other offers variety and perspective.

2. The BGCI, at least currently, is heavily weighted toward BTC and ETH and is very correlated to both assets.

So far this year, both the RAD 30 (-37.5%) and the BGCI (-19.4%) have traded down. As have BTC (-34.6%) and ETH (-0.38%).

The BGCI typically moves with BTC and ETH. Since the beginning of 2018, the BGCI diverged from (read: moved in the opposite direction of) BTC on 13.4% of days (17 total) and diverged from ETH on 7.9% of days (10 total).

The RAD 30 diverged from BTC on 44 days (34.7% of total) and from ETH on 45 days (35.4% of total). RAD 30 moves on its own ~2–3x more often than BGCI. This becomes more evident when examining correlation data and charting how assets change over time.

The below charts compare the BGCI’s and the RAD 30’s deltas (daily change) to ETH’s and BTC’s deltas.

We view Bloomberg’s creation of a crypto index as another positive for the decentralized economy. Indices are valuable tools for markets and market participants.

About the Rad 30 Crypto Composite

The Rad 30 Crypto Composite (RAD 30) tracks thirty crypto assets across 10 sectors, similar to how the S&P 500 and the NASDAQ Composite track stocks. The RAD 30 presents a diverse view of decentralization — the RAD 30 strays away from Bitcoin, Ethereum, and other large crypto assets (in terms of market cap).

The sectors included in the RAD 30 are the sectors that are the most prone to decentralization and have the largest market opportunities. The crypto assets included in the RAD 30 are the best positioned crypto assets in each sector.

Each sector is weighted evenly (10%). Each constituent crypto asset in each sector is weighted proportionally according to its market capitalization.

About Radicle and Rad.Crypto

Radicle is a category-defining research and information company built on understanding startups and new technologies. Rad.Crypto is Radicle’s crypto research arm.

Disclaimer: Radicle is not an investment advisor, and Radicle makes no representation regarding the advisability of investing in any security, asset, token, fund or other investment vehicle. Radicle is not a tax advisor. Inclusion of a security, asset or token within a Radicle composite or any Radicle analysis is not a recommendation by Radicle to buy, sell, or hold such security, nor is it considered to be investment advice. Past performance of a composite is not an indication or guarantee of future results. All Radicle materials have been prepared solely for informational purposes based upon information generally available to the public and from sources believed to be reliable. The composite data and analysis shown do not represent the results of actual trading of investable assets/securities. Radicle maintains the composite(s) and calculates the composite levels and performance shown or discussed, but does not manage actual assets.

Comparing Crypto Indices: Understanding the Bloomberg Galaxy Crypto Index and the Rad 30 Crypto… was originally published in Radicle on Medium, where people are continuing the conversation by highlighting and responding to this story.

Today, we’re releasing the alpha version of the Rad 30 Crypto Composite. Accordingly, we thought we’d sketch out the what, the why, and the how.

The What

The Rad 30 Crypto Composite (RAD 30) tracks thirty crypto assets, similar to how the S&P 500 and the NASDAQ Composite track stocks.

In a growing and snowballing crypto landscape, the Rad 30 will help anyone interested in the decentralized economy to broaden their perspective, prioritize their attention, and access a third benchmark for gauging the performance of the crypto market.

While correlation to Bitcoin and Ethereum across the crypto market is relatively high, in Q1 2018, the Rad 30 (which excludes BTC and ETH) moved in the opposite direction of BTC and ETH on 45% of days. (You can find our Quarterly Weighting Report here for more analysis of Q1.)

The Why

Radicle is a disruption research company. We study and provide insights on the startups and technologies that are creating the future. It’s impossible to be in that business — or any business for that matter — and not have confronted the mega-themes of decentralization, blockchains, and crypto assets. Especially over the past ~24 months.

When contending with the topic of decentralization and crypto, in conversation with ourselves and our customers, we found ourselves asking many familiar questions:

• How do I know what to pay attention to?
• Which crypto assets are real and which are scams?
• Are there use cases for crypto outside of digital money and store of value?
• How big is the actual market opportunity for decentralized apps?
• What markets are most fertile for decentralization?

One challenge, in particular, felt like something that we could solve:

Show me a handful of real crypto assets that together and individually will help me make sense of decentralization and “crypto”. How is it progressing? What markets will it disrupt? How big of an opportunity is there for disruption?

The Rad 30 Crypto Composite will help address these questions. The Rad 30 consists of thirty crypto assets that are representative of the broader decentralized economy. These are not just the crypto assets with the largest market caps. These are crypto assets and platforms that are addressing opportunities for decentralization beyond digital money and store-of-value.

Why in the world should I care?

There are a number of reasons to care about the RAD 30. But we’ll keep it to three:

1. Broaden your perspective. There’s more to pay attention to than Bitcoin, Bitcoin copycats, and Ethereum. The top crypto assets by market cap present a very specific view of decentralization. They do not offer an understanding of how crypto is impacting the diverse set of industries in which it is being deployed and explored.

2. Prioritize your attention. Once you’ve decided to broaden your perspective, finding the crypto assets that matter will allow you to track substantive progress on a weekly, monthly, quarterly basis. Understanding what crypto assets are included (and why they’re included) in the RAD 30 will help business people of all types prioritize the attention they dedicate to decentralization and crypto.

3. A third benchmark. Use the Composite, its component sectors, and constituent crypto assets as benchmarks not only for each other but also for ETH and BTC. The Composite will be a lens for analyzing questions such as:

• What is the relationship between Ethereum and dApps built on top of it?
• How important is the success of the broader decentralized ecosystem to the success of Bitcoin?

These questions are only the tip of the iceberg. We see the potential for analysts to use the RAD 30 to build new formulas offering new analysis that benefits the crypto community. We believe that informed business people should understand how the decentralized economy is progressing, what markets are being disrupted by it, and where opportunity for further disruption lies. To that end, just as the stock market has the S&P 500, the Dow Jones Industrial Average, and the NASDAQ Composite, we want the decentralized economy to have the Rad 30 Crypto Composite.

The How

There are more than 30 crypto assets out there. So, how then did we go about choosing the RAD 30?

In a space where there were 159 ICOs in Q1 2018 alone, it’s impractical to analyze every emergent crypto platform and asses its viability and potential. So, instead of being reactive to every new crypto asset, one ought to be proactive and seek to identify the best opportunities.

To solve this, rather than starting with specific crypto assets, we take a broader approach, asking questions from a sector lens. Which sectors are the most susceptible to decentralization? Of those sectors, which present the largest market opportunities?

Then we ask ourselves: how do the crypto assets in these sector compare in terms of incentive structures and current trading levels? Our combined bottoms-up and top-down approach enables us to prioritize certain crypto assets and sectors over others.

Each crypto asset is then weighted according to a combined fundamental and quantitative analysis. Similar to the S&P 500, the RAD 30 is finally calculated as the aggregate score of the weighted thirty crypto assets.

We believe the RAD 30 has the potential to bring a little bit of structure to a structureless market. We’re excited to see what can come out of the RAD 30!

Find out more about the Rad 30 Crypto Composite here!

Update: April’s Performance

Over the course of April, the RAD 30 was up 93.7% while BTC and ETH were up 32.5% and ~69%, respectively. Decentralized social media platforms and decentralized cloud computing were the two best performing sectors, both up 146% and 139%, respectively.

If you’d like to access our RAD 30 data, please email analyst@rad.report.

Radicle is a category-defining research and information company built on understanding startups and new technologies. Rad.Crypto is Radicle’s crypto research arm.

Disclaimer: Radicle is not an investment advisor, and Radicle makes no representation regarding the advisability of investing in any security, asset, token, fund or other investment vehicle. Radicle is not a tax advisor. Inclusion of a security, asset or token within a Radicle composite or any Radicle analysis is not a recommendation by Radicle to buy, sell, or hold such security, nor is it considered to be investment advice. Past performance of a composite is not an indication or guarantee of future results. All Radicle materials have been prepared solely for informational purposes based upon information generally available to the public and from sources believed to be reliable. The composite data and analysis shown do not represent the results of actual trading of investable assets/securities. Radicle maintains the composite(s) and calculates the composite levels and performance shown or discussed, but does not manage actual assets.

Introducing the Rad 30 Crypto Composite was originally published in HackerNoon.com on Medium, where people are continuing the conversation by highlighting and responding to this story.

The Facebook–Cambridge Analytica scandal has social media users and politicians asking important questions: How much personal data should I give up so I can use social media platforms? Should I be willing to give up any personal data at all? Should data collection be regulated? And how?

People feel betrayed. Facebook failed at one of its primary responsibilities — protecting its community members. Now, people are looking to delete Facebook all together (see: #deletefacebook). Or they’re looking for alternatives, but turning to Instagram or Whatsapp won’t solve users’ worries. Those platforms are owned by Facebook! Turning to Snapchat or Twitter won’t solve any problems either (as they, too, rely on data collection and monetization).

Where could users turn? An obvious answer the decentralization-inclined would say is decentralized social media. Indeed some have already proffered decentralized social media platforms as viable alternatives (see: here and here). But decentralization may not be the answer. At least not to the Facebook problem. Why? Because the incentives don’t necessarily line up.

If you’re not paying for the product, you are the product.

Decentralization is of course a novel vein of software development with discrete technological advantages (and challenges). Decentralization is also a great framework for understanding the problems with centralization.

The core of the problem in this case isn’t with Facebook, per se. The core of the problem is with centralized social media platforms. If you’re not paying for the product, you are the product.

• User Data and Advertising: Free social media platforms rely on collecting massive user data stashes for precise ad-targeting and social engineering, manipulating what people see. The more personal user data centralized social media platforms accrue, the more precise their algorithms become. Social media platforms are incentivized to scale and be as competitive as possible.

Centralized platforms have other systemic issues like the pervasiveness of bots and censorship.

• Bots: Because social media platforms are free and users can create as many profiles as they like, there are few consequences to bots spamming comment threads or inflating engagement data (such as likes, upvotes, and shares).
• Censorship: Censorship may not be a large issue for the average user — but it definitely is for fringe users, such as those who’ve been kicked off Twitter for having ties to violent groups.

Yes, there are problems with centralized social media platforms. But how do decentralized platforms solve them?

• Shifting of business models: Instead of relying on advertising or data collection, decentralized social media platforms rely on crypto asset appreciation. On decentralized platforms, users reward other users for posted content, contributing to the supply-demand dynamics of the native crypto asset. This reward structure also incentives users to post “good” content. In sum, decentralized platforms don’t need to have ads on their platforms.
• Staking $$$: Having users make micro-payments for actions such as likes, upvotes, and shares prevents spamming and theoretically encourages more authentic engagement. Networks that don’t require staking don’t necessarily solve this problem.
• Crowd governance: Just as centralized platforms are systemically censorship-prone, decentralized platforms are systemically censorship-resistant. Some decentralized platforms are completely censor-free, allowing anyone to post anything. Other platforms (such as Sociall) are community governed with moderators who screen content.

In theory, decentralization tackles most of the problems presented by centralization. But will it work?

As currently conceived, decentralized social media relies on one main premise: that users will pay each other for content.

Most decentralized solutions rely on users paying users. As the golden rule goes: “Pay others how you would like be paid.” Right? Maybe.

How many users are willing to pay others for a Facebook or Twitter post? How much money would they be willing to contribute? Our own survey data suggests that only 5% of people are willing to pay others for their content. If users are unlikely to pay other users anything at all for their posts, then a user-paying-user strategy likely will not succeed.

A decentralized Facebook competitor that doesn’t rely on users-paying-users may have a shot.

A decentralized system needs its incentives to line up in order to propel the supply-demand dynamics of its native crypto-asset. In other words, if those incentives are misaligned, then the platform will fail — regardless if its offer data protection or not.

Will Facebook’s recent breach push people to decentralized alternatives?

Just because there are problems with centralization doesn’t necessarily entail that decentralization will solve them. Decentralized solutions have an uphill battle.

Despite public perception, users value convenience over data privacy. Facebook users are entrenched in their networks. Switching from Facebook to a new platform will come with a cost. People will have to rebuild their networks, rebuild their followings, transfer all their photos. This is Facebook’s moat, and having your network intact is much more convenient than rebuilding it.

Will the #deletefacebook campaign have lasting effect? Probably not. Take the #deleteuber campaign for context. Between 200,000 and 500,000 users deleted their account after the campaign. For a company that serves 40 million monthly rides, losing 500,000 users is a slight hiccup.

Decentralized social media is still small (there are ~1 million uses on Steemit). Facebook is a behemoth, but the timing is better than ever. Decentralized solutions need to leverage Facebook’s misfortunes if they want any possibility of eating at Facebook’s enormous market share.

The Decentralized Social Media industry is a component of the Rad.Index. For more info, to see which tokens are in and out, click here. To view our initial Decentralized Social Media report, click here.

Is decentralization the answer to Facebook’s data breach? Probably not. was originally published in JustStable on Medium, where people are continuing the conversation by highlighting and responding to this story.

In early January, Kodak announced its intention to partner with WENN Digital to release a crypto platform for image digital rights management. The ICO was met with a decent amount of criticism and cynicism. Subsequently, the ICO (originally planned for January 31) was postponed indefinitely.

Last week, after a communication hiatus and nearly two months after the original announcement, KODAKOne released its lightpaper providing an overview of its crypto platform. The key word here being overview. The lightpaper is not a whitepaper — the lightpaper does not detail technical specifics of the platform.

Our main takeaway: KODAKOne misses the point of decentralization.

The lightpaper does not tell us much new information regarding its platform besides that KODAKCoin will be a ERC20 token and its intended platform release will be June 2019. The lightpaper, however, does illustrate the main reason why big organizations will have difficulty launching and popularizing their own crypto assets:

Decentralized platforms typically don’t have business models. At least not in the traditional sense of the word. But KODAKOne’s does.

One of the beauties of decentralization is that it can render middlemen redundant and, in doing so, do away with rent collection and transactions fees (on most blockchain platforms, miners who maintain them charge little to no fees). Instead, the “business model” of a decentralized platform is primarily token appreciation. The supply-demand dynamics of a decentralized system can lead to the appreciation of that platform’s token value. Instead of collecting transaction fees, the team developing a decentralized platform benefits from the appreciation of their token holdings.

KODAKOne, on the other hand, is planning to instill a business model based on transaction fees. Hidden away in a footnote on page 6, the lightpaper reads:

For big businesses, token appreciation is a hard concept to grasp, especially the likes of WENN Digital and Kodak have lived in a world of charging fees. Token appreciation is a fundamentally different way to think about running a company (if we can even consider decentralized platforms ‘companies’). It’s no surprise that centralized companies will struggle to fully embrace decentralization.

KODAKOne’s lightpaper also is a good example of how NOT to write a problem/solution section — there are no mentions of any centralized digital photo marketplace throughout the lightpaper or any backing sources.

The lightpaper did not once mention the largest digital photo marketplace, Shutterstock (Ticker: SSTK), nor did it mention the numerous other microstock photography startups. The lightpaper fails to offer a compelling vision of the existing problems facing the digital photography industry and how to solve them.

One problem with most centralized services is their transaction fees — no one ever really wants to pay. If KODAKOne still plans to have transaction fees, why would a photographer switch from a centralized service with a robust network to a new decentralized service that takes comparable fees? There are other reasons why a photographer might switch in this scenario but KODAKOne’s approach feels neither here nor there.

After all, there’s nothing stopping other developers from building a similar version of KODAKOne that is actually decentralized with no transaction fees. KODAKOne is up against three decentralized photography DRM platforms (StockBlock, GPCC, IPStock) and four multimedia DRM platforms (Decent, CreativeChain, Stop The Fakes, Mavo). In other words, KODAKOne has competition, and it will need to provide some more robust technical specifics to merit the trust of accredited investors, in our opinion.

KODAKOne’s lightpaper is a case study of how not to write a lightpaper or design a decentralized system. We’ll be on the lookout to see if other centralized companies implementing decentralized systems (like classic game developer Atari SA) make the same mistakes.

For more information on the digital rights management space, read our (free) breakdown here.

What big companies should NOT learn from KODAKOne’s lightpaper was originally published in Radicle on Medium, where people are continuing the conversation by highlighting and responding to this story.