Don’t miss our fireside chat with Glovo CEO Oscar Pierre at the upcoming EU-Startups Summit!

On the 28th-30th April 2021, we’re hosting the 7th edition of the EU-Startups Summit. At our annual flagship event you’ll have the chance to (virtually) connect with over 1,500 founders, startup enthusiasts, corporates, angel investors, VCs, and the media, learn from 70+ expert speakers, take part in workshops with internationally successful founders, network via our events…

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Oscar Health prices IPO at $39 and secures a $9.5B valuation

Late last night Oscar Health, a tech-enabled medical insurance provider, priced its IPO at $ 39 per share. The final price came in $ 1 per share above its raised IPO guidance; Oscar Health had originally targeted a $ 32-$ 34 per-share IPO price.

Some 37,041,026 shares were sold at $ 39, including 36,391,946 offered by the company itself. Not counting shares reserved for the company’s underwriters — more on those here — Oscar Health found at least $ 1.44 billion worth of demand for its equity at $ 39 apiece. More than 98% of the funds from the aggregate share sale went to the company’s accounts.

For backers Thrive Capital, Founders Fund, Formation 8, CapitalG, Fidelity, Alphabet, Coatue, Tiger Global and others, the day is a financial coup.

But just how well did the company’s private backers do? To know that, we have to calculate what the company is worth at $ 39 per share. Oscar sold more shares in its debut than its final S-1/A filing expected, making its ensuing share count slightly tedious to calculate. However, the company’s simple IPO valuation appears to be just over $ 7.92 billion at its IPO price. IPO investing group Renaissance Capital calculates the company’s fully diluted valuation, a figure that counts some additional shares, including that have been earned through options that have yet to be exercised, for example, at $ 9.5 billion.

Oscar Health’s IPO has been a success from several perspectives. From a fundraising viewpoint, the company raised more than it may have initially expected to, comparing its final price point against its initial range. From a valuation perspective, the company is now worth a multiple of its last-known private valuation, some $ 3.2 billion set during its 2018 Series G, per PitchBook data. The company did raise more private capital between that round and its IPO, but we lack valuation figures for those deals.

The company will begin trading this morning in a notable test for insurtech, and the sub-niche of medical insurtech. TechCrunch’s prior notes on the company’s IPO valuation aside, the bidding public have repriced Oscar Health. Now let’s see what the company will manage once it truly begins to float.

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Startups – TechCrunch

Oscar Health raises IPO price as Coupang releases bullish debut valuation

Investors appear excited to buy shares in impending public companies Oscar Health and Coupang. TechCrunch covered both extensively during their ramp toward the public markets, and more recently regarding their IPO march. And now, with a combined valuation well above $ 50 billion, both public offerings should make a splash.

And in good news for their respective investors, recent pricing points to an IPO market that remains enthusiastic about new listings, despite some recent chop among public technology equities.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

The valuation news from Coupang and Oscar Health bodes well for other impending offerings, including a host of SPAC-led flotations and the coming direct-listing of cryptocurrency giant Coinbase.

This morning, let’s collect pricing news on both Coupang and Oscar Health, eat some modest crow in the case of the latter and prep ourselves for the next two unicorn public offerings.

These companies will soon convert tens of billions of dollars of illiquid private shares into public currency. As such, their offerings may reveal investors’ sentiments regarding e-commerce and insurance companies backed by venture capital.

Oscar Health and Coupang’s IPO pricing

As TechCrunch reported this morning, South Korean e-commerce player Coupang could be worth as much as $ 51 billion in its IPO if its first debut price range of $ 27 to $ 30 per share holds up; the price range matches earlier expectations for the company, which recorded revenues of $ 11.97 billion in 2020, up more than 90 percent from its year-ago results.

Oscar Health’s new IPO price range is even more interesting than Coupang’s first. The insurance startup’s first IPO pricing interval of $ 32 to $ 34 per share valued the company at a midpoint, full-diluted price of around $ 7.7 billion. Its range is now $ 36 to $ 38 per share, more than modestly higher than its prior target price range.

Startups – TechCrunch

Oscar Health’s initial IPO price is so high, it makes me want to swear

Amidst all the hype that Lemonade (IPO), Root (IPO), Metromile (SPAC-led debut) and other insurtech players have generated in the last year, it’s been easy to forget about Oscar Health. But now that the company founded in 2012 is approaching the public markets, one of the early tech-themed insurance companies is catching up on the attention front.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

So this morning we’re digging into Oscar Health’s first IPO pricing interval, hoping to understand how the market is valuing its unprofitable health-insurance enterprise.

Recall that Oscar Health was valued at around $ 3.2 billion in March of 2018. That datapoint, via PitchBook, is dated. Oscar Health raised hundreds of millions since (per several venture-capital tracking databases, including Crunchbase) but we lack a final private valuation for the company.

Regardless, with Oscar Health now targeting a $ 32 to $ 34 per-share IPO range, we can get our hands dirty.

Let’s get some valuation numbers and then decide if Oscar Health feels cheap or expensive at that price.

Billion-dollar IPO

Oscar Health is looking to reap as much as $ 1.21 billion in its IPO, a huge sum. The company is selling 30,350,920 shares, with 4,650,000 additional shares reserved for its underwriters. Existing shareholders are selling another 649,080 shares.

This means that after the IPO, Oscar Health will have 197,037,445 Class A and B shares in circulation, or 201,687,445 after counting shares reserved for its underwriters.

Using the company’s $ 32 to $ 34 per-share range, we can calculate a valuation minimum of $ 6.31 billion for the company (lower share count, low-end of price range) and $ 6.86 billion (higher share count, high-end of price range). That’s the company’s simple IPO valuation.

Oscar Health may also sell up to $ 375 million of its shares at its IPO price to three different funds. The company advises that the “indication of interest is not a binding agreement or commitment to purchase,” so we can ignore it for now.

Startups – TechCrunch

Extra Crunch roundup: Metromile CEO interview, Oscar Health’s IPO plans, our 2-year anniversary, more

I’m very proud of the work we’re doing here at Extra Crunch, so it gives me great pleasure to announce that today is our second anniversary.

Thanks to hard work from the entire TechCrunch team, authoritative guest contributors and a very engaged reader base, we’ve tripled our membership in the last 12 months.

As Extra Crunch enters its third year, we’re putting our foot on the gas in 2021 so we can bring you more:

Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription

To be completely honest: Eric and I wavered about posting this announcement. Both of us would prefer to show the results of our work than make a list of future-looking statements, so I’ll sum up:

I’m proud of the work we’re doing because people around the world use the information they find on Extra Crunch to build and grow companies. That’s big!

Thanks very much for reading Extra Crunch; have a great weekend.

Walter Thompson
Senior Editor, TechCrunch

Extra Crunch turns two second anniversary image: a cake with two candles and the EC logo

Image Credits: Bryce Durbin

Will ride-hailing profits ever come?

Before the pandemic began, I took about seven or eight hailed rides each month. Since I began physically distancing from others to stem the spread of the coronavirus in March 2020, I’ve taken exactly 10 hailed rides.

Your mileage may vary, but last year, Uber and Lyft both reported steep revenue losses as travelers hunkered down at home. Today, Alex Wilhelm says both transportation platforms plan to reach adjusted profitability by Q4 2021.

He unpacked the numbers “to see if what the two companies are dangling in front of investors is worth desiring.” Since he usually doesn’t focus on publicly traded stocks, I asked Alex why he focused on Uber and Lyft today.

“Utter confusion,” he replied.

“Investors have bid up their stocks like the two companies are crushing the game, instead of playing a game with their numbers to reach some sort of profit in the future,” Alex explained. “The stock market makes no sense, but this is one of the weirder things.”

TechCrunch’s favorites from Techstars’ Boston, Chicago and workforce accelerators

In the theater, a “four-hander” is a play that was written for four actors.

Today, I’m appropriating the term to describe this roundup by Greg Kumparak, Natasha Mascarenhas, Alex Wilhelm and Jonathan Shieber that recaps their favorite startups from Techstars accelerators.

The quartet selected four startups each from Chicago, Boston and Techstars Workplace Development.

“As always, these are just our favorites, but don’t just take our word for it. Dig into the pitches yourself, as there’s never a bad time to check out some super-early-stage startups.”

As more insurtech offerings loom, CEO Dan Preston discusses Metromile’s SPAC-led debut

Neoinsurance company Metromile began trading publicly this week after it combined with a special purpose acquisition company.

Metromile will likely be one of 2021’s many SPAC-led debuts, so Alex interviewed CEO Dan Preston to learn more about the process and what he learned along the way.

A notable takeaway: “Preston said SPACs are designed for a specific class of company; namely those that want or need to share a bit more story when they go public.”

Adtech and martech VCs see big opportunities in privacy and compliance

Blue Little Guy Characters Vector art illustration.Copy Space.

Image Credits: alashi (opens in a new window) / Getty Images

Senior Writer Anthony Ha and Extra Crunch Managing Editor Eric Eldon surveyed three investors who back adtech and martech startups to learn more about what they’re looking for and whether deal flow has recovered at this point in the pandemic:

  • Eric Franchi, partner, MathCapital
  • Scott Friend, partner, Bain Capital Ventures
  • Christine Tsai, CEO and founding partner, 500 Startups

Commercializing deep tech startups: A practical guide for founders and investors

BEIJING, CHINA - MAY 26: A researcher deals with a wafer arrayed with carbon nanotubes (CNT) at a laboratory on May 26, 2020 in Beijing, China. (Photo by VCG/VCG via Getty Images)

Image Credits: VCG (opens in a new window) / Getty Images

I have a hard time envisioning all of the hurdles deep tech founders must overcome before they can land their first paying customer.

How do you sustainably scale a company that probably doesn’t have revenue and isn’t likely to for the foreseeable future? How big is the TAM for an unproven product in a marketplace that’s still taking shape?

Vin Lingathoti, a partner at Cambridge Innovation Capital, says entrepreneurs operating in this space face a unique set of challenges when it comes to managing growth and risk.

“Often these founders with Ph.D.s and postdocs find it hard to accept their weaknesses, especially in nontechnical areas such as marketing, sales, HR, etc.,” says Lingathoti.

How will investors value Metromile and Oscar Health?

This week, auto insurance startup Metromile completed its combination with SPAC INSU Acquisition Corp. II.

Last Friday, health insurance company Oscar Health announced its plans to launch an initial public offering.

As the saying goes: Past performance is no guarantee of future results, but using 2020 debuts by neoinsurance firms Lemonade and Root as a reference point, Alex says the IPO window is wide open for other players in the space.

“All the companies in our group are pretty good at adding customers to their businesses,” he found.

Dear Sophie: How can I improve our startup’s international recruiting?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie:

We’ve been having a tough time filling vacant engineering and other positions at our company and are planning to make a more concerted effort to recruit internationally.

Do you have suggestions for attracting workers from abroad?

— Proactive in Pacifica

5 creator economy VCs see startup opportunities in monetization, discovery and much more

Young man sitting in a room divided by brain hemispheres.Creative half and logical half.

Image Credits: ALLVISIONN (opens in a new window) / Getty Images

The people who produce viral TikTok duets, in-demand Substack newsletters and popular YouTube channels are doing what they love. And the money is following them.

Many of these emerging stars have become media personalities with full-fledged production and distribution teams, giving rise to what one investor described as “the enterprise layer of the creator economy.”

More VCs are backing startups that help these digital creators monetize, produce, analyze and distribute content.

Natasha Mascarenhas and Alex Wilhelm interviewed five of them to learn more about the opportunities they’re tracking in 2021:

  • Benjamin Grubbs, founder, Next10 Ventures
  • Li Jin, founder, Atelier Ventures
  • Brian O’Malley, general partner, Forerunner Ventures
  • Eze Vidra, managing partner, Remagine Ventures
  • Josh Constine, principal, SignalFire

Are SAFEs obscuring today’s seed volume?

Simple agreements for future equity are an increasingly popular way for startups to raise funds quickly, but “they don’t generate the same paperwork exhaust,” Alex Wilhelm noted this week.

This creates cognitive dissonance: Investors see a hot market, while people who rely on public data (like journalists) get a different picture.

“SAFEs have effectively pushed a lot of public signal regarding seed deals, and even smaller rounds, underground,” says Alex.

Container security acquisitions increase as companies accelerate shift to cloud

Data generated image of CPU in space.

Image Credits: Andriy Onufriyenko / Getty Images

Many enterprise companies were snapping up container security startups before the pandemic began, but the pace has picked up, reports Ron Miller.

The growing number of companies going cloud-native is creating security challenges; the containers that package microservices must be correctly configured and secured, which can get complicated quickly.

“The acquisitions we are seeing now are filling gaps in the portfolio of security capabilities offered by the larger companies,” says Yoav Leitersdorf, managing partner at YL Ventures.

Two $ 50M-ish ARR companies talk growth and plans for the coming quarters

illustration of money raining down

Image Credits: Bryce Durbin / TechCrunch

In December 2019, Alex Wilhelm began reporting on startups that had reached the $ 100M ARR mark. A year later, he decided to reframe his focus.

“Mostly what we managed was to collect a bucket of companies that were about to go public,” he said.

Since then, he has recalibrated his sights. In the latest entry of a new series focusing on “$ 50M-ish” companies, he studies SimpleNexus, which offers digital mortgage software, and photo-editing service PicsArt.

Alex has more interviews and data dives coming on other companies in this cohort, so stay tuned.

With a higher IPO valuation, is Bumble aiming for’s revenue multiple?

Dating platform Bumble initially set a price of $ 28 to $ 30 for its upcoming IPO, but at its new range of $ 37 to $ 39, Alex calculated that it could reach a max valuation of $ 7.4 billion to $ 7.8 billion.

Extrapolating revenue from its Q3 2020 numbers, he attempted to find the company’s run rate to see if it’s overpriced — and how well it stacks up against rival Match.

Oscar Health’s IPO filing will test the venture-backed insurance model

Mario Schlosser (Oscar Health) at TechCrunch Disrupt NY 2017

Jon Shieber and Alex Wilhelm co-bylined a story about Oscar Health, which filed to go public last week.

Although the health insurance company claims 529,000 members and a compound annual growth rate of 59%, “it’s a deeply unprofitable enterprise,” they found.

Jon and Alex parsed Oscar Health’s 2019 comps and its 2020 metrics to take a closer look at the company’s performance.

“Both Oscar and the high-profile SPAC for Clover Medical will prove to be a test for the venture capital industry’s faith in their ability to disrupt traditional healthcare companies,” they write.

SoftBank and the late-stage venture capital J-curve

TOKYO, JAPAN - FEBRUARY 12: SoftBank Group Corp. TOKYO, JAPAN - FEBRUARY 12: SoftBank Group Corp. Chairman and Chief Executive Officer Masayoshi Son speaks during a press conference on February 12, 2020 in Tokyo, Japan. SoftBank reported its third-quarter earnings results today following the approval of a merger between T-Mobile US Inc. and SoftBank's U.S. telecom unit Sprint Corp. from a federal judge. (Photo by Tomohiro Ohsumi/Getty Images)

Image Credits: Tomohiro Ohsumi (opens in a new window) / Getty Images

Managing Editor Danny Crichton filed a column about Softbank’s Vision Fund that tried to answer a question he asked in 2017: “What does a return profile look like at such a late stage of investment?”

Softbank’s recent earnings report shows that its $ 680 million bet on DoorDash paid off handsomely, bringing back $ 9 billion. Compared to its competition, “the fund is actually doing quite decent right now,” he wrote. But Softbank has invested $ 66 billion in 74 unexited 74 companies that are worth $ 65.2 billion today.

“SoftBank quietly chopped half of the performance fees for its VC managers, from $ 5B to $ 2.5B, which led us to ask: are the best investments in the fund already in SoftBank’s rearview mirror? One upshot: WeWork seems to have turned something of a corner, with some improvements in its debt profile portending more positive news post-COVID-19.”

Startups – TechCrunch

[Lemonade in TechCrunch] How will investors value MetroMile and Oscar Health?

In the wake of last year’s debuts by neoinsurance companies Lemonade and Root, it’s not surprising to see others test the public markets. For example, Oscar Health recently announced its intention to go public via a traditional IPO. How the new entrants will fare, however, is not clear.

Read more here.

The post [Lemonade in TechCrunch] How will investors value MetroMile and Oscar Health? appeared first on OurCrowd Blog.

OurCrowd Blog

How will investors value MetroMile and Oscar Health?

Last night, MetroMile and SPAC INSU Acquisition Corp. II completed their combination, putting the per-mile auto insurance startup up for regular trading today for the first time.

In the wake of last year’s debuts by neoinsurance companies Lemonade and Root, it’s not surprising to see others test the public markets. For example, Oscar Health recently announced its intention to go public via a traditional IPO.

How the new entrants will fare, however, is not clear.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

There is something of a tale of two companies in Lemonade and Root, with the pair valued at divergent multiples and sporting very different post-IPO trajectories, at least concerning their value.

While Lemonade has appreciated greatly from its IPO price ($ 29) to its current value ($ 155.33), Root’s share price dropped from its debut ($ 27) to today ($ 21.75).

This morning, as MetroMile starts its life as a public company, Oscar Health preps its own run at an IPO and other neoinsurance players like Hippo wait in the wings, let’s quickly check the difference between how Root and Lemonade have fared, and then ask what we can learn from their different valuation multiples and what they might mean for the next startup insurance players hoping to go public while the IPO window is wide open.

Root, Lemonade

Lemonade’s path to the public markets was one that started modestly with its first IPO pricing, improved, and then, after technically going public at a down-round valuation, took off like a rocket. Root’s IPO pricing run involved what we thought of as a strong IPO range and then an above-target pricing.

But since then, Lemonade shares have rallied to several times their original price, while Root has dropped around 20%. Lemonade, for reference, sells rental insurance with an eye on going up-market in time to other forms of home-focused insurance. Root is in the auto insurance market, where MetroMile also works.

Both Lemonade and Root have yet to announce Q4 2020 results, so we’ll look at their Q3 details instead. We want to get a handle for how divergently their insurance incomes are being treated. This should give us a better understanding of how Wall Street values each, then we’ll apply what we learn to our two new companies. What we learn today will hopefully bear on other insurtech startups that want liquidity during the current cycle.

Results via the company, comparisons are Q3 2019:

  • Root Q3 2020 revenue: $ 50.5 million (impaired from $ 75.8 million).
  • Root Q3 2020 gross profit: $ 0.7 million (improved from -$ 36 million).
  • Root Q3 2020 net loss: $ 85.2 million (improved from -$ 100.1 million).
  • Premiums in force: $ 600.1 million.
  • Valuation: $ 5.45 billion (Google Finance).

This gives us Root revenue run rate multiple of around 27x, and a premium in force multiple of just over 9x. Now let’s observe Lemonade’s data.

Results via the company, comparisons are Q3 2019:

  • Lemonade Q3 2020 revenue: $ 10.5 million (impaired from $ 17.8 million).
  • Lemonade Q3 2020 gross profit: $ 7.3 million (improved from $ 4 million).
  • Lemonade Q3 2020 net loss: $ 30.9 million (improved from $ 31.1 million).
  • Premiums in force: $ 188.9 million.
  • Valuation: $ 9.33 billion (Google Finance).

Looking at the same two metrics, Lemonade has a run rate multiple of 222x, and a premium in force multiple of more than 49x.

Startups – TechCrunch

Oscar Health’s IPO filing will test the venture-backed insurance model

Late Friday, Oscar Health filed to go public, adding another company to today’s burgeoning IPO market. The New York-based health insurance unicorn has raised well north of $ 1 billion during its life, making its public debut a critical event for a host of investors.

Oscar Health lists a placeholder raise value of $ 100 million in its IPO filing, providing only directional guidance that its public offering will raise nine figures of capital.

Both Oscar and the high-profile SPAC for Clover Medical will prove to be a test for the venture capital industry’s faith in their ability to disrupt traditional healthcare companies.

The eight-year-old company, launched to capitalize on the sweeping health insurance reforms passed under the administration of President Barack Obama offers insurance products to individuals, families and small businesses. The company claimed 529,000 “members” as of January 31, 2021. Oscar Health touts that number as indicative of its success, with its growth since January 31 2017 “representing a compound annual growth rate, or CAGR, of 59%.”

However, while Oscar has shown a strong ability to raise private funds and scale the revenues of its neoinsurance business, like many insurance-focused startups that TechCrunch has covered in recent years, it’s a deeply unprofitable enterprise.

Inside Oscar Health

To understand Oscar Health we have to dig a bit into insurance terminology, but it’ll be as painless as we can manage. So, how did the company perform in 2020? Here are its 2020 metrics, and their 2019 comps:

  • Total premiums earned: $ 1.67 billion (+61% from $ 1.04 billion).
  • Premiums ceded to reinsurers: $ 1.22 billion (+113%, from $ 572.3 million).
  • Net premium earned: $ 455 million (-3% from $ 468.9 million).
  • Total revenue: $ 462.8 million (-5% from $ 488.2 million).
  • Total insurance costs: $ 525.9 million (-8.7% from $ 576.1 million).
  • Total operating expenses: $ 865.1 million (+16% from $ 747.6 million).
  • Operating loss: $ 402.3 million (+56% from $ 259.4 million).

Let’s walk through the numbers together. Oscar Health did a great job raising its total premium volume in 2020, or, in simpler terms, it sold way more insurance last year than it did in 2019. But it also ceded a lot more premium to reinsurance companies in 2020 than it did in 2019. So what? Ceding premiums is contra-revenue, but can serve to boost overall insurance margins.

As we can see in the net premium earned line, Oscar’s totals fell in 2020 compared to 2019 thanks to greatly expanded premium ceding. Indeed, its total revenue fell in 2020 compared to 2019 thanks to that effort. But the premium ceding seems to be working for the company, as its total insurance costs (our addition of its claims line item and “other insurance costs” category) fell from 2020 to 2019, despite selling far more insurance last year.

Sadly, all that work did not mean that the company’s total operating expenses fell. They did not, rising 16% or so in 2020 compared to 2019. And as we all know, more operating costs and fewer revenues mean that operating losses rose, and they did.

Oscar Health’s net losses track closely to its operating losses, so we spared you more data. Now to better understand the basic economics of Oscar Health’s insurance business, let’s get our hands dirty.

Startups – TechCrunch