Insurtech carrier Lemonade doubles-down on revenue-secured funding
Insurtech Lemonade extended a running deal with an investor group that finances its client acquisition costs, adding $140 million to the programme while extending its term by another year to end-2025.
In a running agreement with partner GC Customer Value Arranger, who handles the deal on behalf of outside investors, investors pony up 80% of the client acquisition costs for a given batch of business and take a share of the revenue until they have achieved an effective internal rate of return of 16%. After that, Lemonade can pocket all the related revenue for itself.
The initial deal had been set to run from mid-2023 through end-2024 for an investor commitment of $150 million.
The move to revenue-secured funding in 2023 followed word that the group was on track for a widened 2023 EBITDA loss alongside somewhat muted growth of premium in-force as inflation forced the group to curtail growth in some lines.
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