Generali Analysis Introduction

Stefano Bison
Group Head of Business Development, Partnerships & Innovation, Generali

It’s a real honor to sponsor and open this year’s publication of such an interesting report that has already reached its fourth edition. But also quite a challenge since we are in times of rare uncertainty, hence very easy to get it wrong, and mistake the noise for the signal.

After a “super-cycle” that lasted c. 10 years for Fintechs (including Insurtechs), and despite record level of dry powder available, the sector is facing real challenges across almost all geographies, characterised by:

  • Valuations cooling down quickly, even with notable downrounds
  • Parallel liquidity and credit crunches
  • Hiring slow down from both startups and tech companies, and even some visible layoffs
  • Lower number of new Fintechs and Insurtechs created
  • Fewer exits (IPO market virtually frozen, SPACs evaporated, M&A limited)
  • Corporate VC activity declining rapidly
  • The largest VC funds progressively moving towards earlier stages to decouple from the market cycle

This is certainly a harsh environment in which to operate and whilst this narrative might seem too hard on the Insurtech sector it is illustrative of the very real challenges to overcome.

But I am, in parallel, also optimistic. Such a milieu can still be compatible with life (of startups) and bring good news to a sector that has seen its share of hype but ultimately must be able to generate real value to survive and flourish. Valuations are getting more sound, investors moving finally “back to basics”, some consolidation happening, cost bases getting rationalized, focus shifting to bottom line from top-line or, even worse, “vanity metrics”.

The best startups will strive, survive, and grow stronger, and while many weaker may disappear, the overall sector will re-emerge more solid from the (painful) journey. Also, and most importantly, startups and corporates will get closer in terms of objectives, focus and cultures, making collaborations and partnerships easier, as well as all those transfers – of value, tech and talent that are necessary to effectively integrate innovative StartUp offerings into corporate incumbents.

Innovation is ultimately a “force for good”, necessary for the long term economic growth and sustainability (the real one, to be distinguished from the massive amount of greenwashing all around us) of corporates, sectors and the whole economy, and startups are a fundamental element of it.

But Innovation is like a large and complex symphonic orchestra: it requires numerous different elements to play together, fully pitched and synchronized, in order to create “the magic”. I named a few components at the beginning of this piece, certainly not exhaustively, and the question now is: which factor is going to be the oboe playing the 440 Hz “A” and allowing, again, the tuning of all the elements of the ensemble?

It may be too difficult to say, and let’s see how the sector will evolve, but for now let’s focus on these fantastic top 100 insurtechs and on their USPs that allowed them to distinguish themselves and become so successful; be it an inspiration for all the insurance sector managers and other entrepreneurs! It is clearly possible to be successful also in such an environment. Kudos to all courageous entrepreneurs and talented Insurtech teams. Talent always beats cycles!

A final recommendation to all StartUppers – and, maybe more importantly, to their investors: Forget about cycles, be more entrepreneurs and less financial analysts. If an idea has potential market / business value just follow it and execute with 100% dedication.

Value is always achievable also in the worst scenarios, especially in the resilient insurance industry.

Good luck!

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