Innovative companies in the insurance industry have enjoyed significant growth in venture capital over the past two years. Some Colorado investors may notice an obvious contradiction between the insurance industry’s focus on risk management and venture capitalists seeking speculative high rewards. However, the recent turn should not be a shock, according to analysts.
From 2014 to 2015, insurance startups had a large gain of nearly 50 percent in venture capital funding to $420 million. This rush of growth and seed capital for what is essentially a loss-mitigation services industry was enormous, but it paled next to 2016’s growth. Venture funding shot up to $830 million in 2016, and it has nearly hit that already in 2017, with $740 million so far.
In the past year, 75 insurance-related companies have raised over $1 million in the past year. This includes small and mid-cap enterprises. Some of the oldest and largest insurance companies are among the best represented providers of this venture capital. The reason given for this influx of interest and cash appears to be a desire by these established companies to adapt to widespread changes in the industry.
Denver entrepreneurs seeking venture capital or other sources of funding for their business ventures must often juggle multiple tasks at once. They have to stay abreast of funding trends that effect their industry, compile research and financials into coherent and convincing business plans, and identify potential sources of capital. An attorney is capable of overseeing many of the more technical legal tasks, helping new businesses avoid regulation pitfalls, and providing advice specific to the situation faced by a startup or established company aiming for growth.