APAC Insuretech Funding Follows Global Trends but Exits Take a Different Path

The global Insuretech sector has proven to be just as susceptible to the tech downturn as other sectors, but whilst the general trajectory for valuations has been down in recent times, there’s a lot of nuance in Insuretech across different markets and business models.  

In an attempt to identify some insights and trend lines, we looked at ten years of transaction data from capital raisings and exits involving venture capital, private equity, corporate and strategic M&A and IPOs. We did this at both global and regional levels.   

The trends are more or less the same for our region (Southeast Asia and ANZ) as for the whole world - with the total number of venture capital deals closed in the sector rising every year from 2015 to 2021 (spoiler alert – 2022 and 2023 were a disaster for Insuretech cap raises).  

When there’s a consistent rise in deal count over a set time period, the implication is that either new start-ups are emerging, or the timeframe between raises is getting shorter. What’s interesting is that the global growth in deal numbers was relatively mild over the time measured, growing at a 10-40% rate year-on-year. (Compare this, for example, to the number of AI deals closed this year, jumping by orders of magnitude over last year). 

McKinsey note that in 2022, investors’ optimism was “tempered by pressure from inflation, interest rates, geopolitical and macroeconomic uncertainty.” This sentiment was echoed by BCG, calling out a decline in the funding of all growth stages. The biggest decrease was in later-stage funding through Series C+ deals, with exits drying up as macroeconomic conditions and exit valuations worsened.  

At a global level, venture investors have continued to value Insuretech opportunities, but the industry has not attracted innovators in their droves. Slow and steady sector growth: a tortoise to Web3’s hare perhaps? 

Exits

Things get considerably more interesting when we dive into exits, as the data in SEA and ANZ points to a much smaller role for private equity than for strategic and corporate acquirers. 

Globally speaking, IPOs have delivered only a handful of exits each year. Whilst corporate and strategic buyers account for between ~55-70% of deals annually, it’s clear that there’s a meaningful role for PE players in the sector, accounting for ~30-40% of deals each year.

At the regional level, it’s a different story, with strategic and corporate buyouts dominating the chart in most years, making up ~65-90% of all deals in 6 out of the 8 years we have full data for.

In the SEA + ANZ region private equity isn’t really in the picture, accounting for only ~15-30% of regional exit activity by deal count (with transaction valuations a little harder to pin down). Meanwhile IPOs are an infrequent and more volatile exit route, reflecting the state of the IPO markets more generally. 

In summary, in this region it pays to build relationships with strategics as you grow, as they may well prove the clearest path to liquidity and that island you’ve always dreamed of buying…. before you find out it’s completely uninsurable and likely to be beneath the sea before you can move in!