We dive deep into our sectors. Our research drives our insights and thesis-driven approach.

Insurtech generally remains out of favor for many venture investors today, and I’m often asked about whether I continue to be excited about the sector (spoiler: yes). Equal’s Product Owners recently conducted overviews of the current investment landscape in our respective focus areas. Today, we’re sharing our perspective on the insurance sector — linked here via Docsend. We encourage you to review the deck and let us know your thoughts! Below is a quick TL:DR of the key stats and takeaways you’ll find inside:

One of the things that continues to surprise me 10 years into the venture game is its collective groupthink. For an industry that preaches outliers and contrarian thinking, I find it (at the median) far more consensus-driven than any other form of asset management. During our recent annual meeting, we diagnosed some of these dynamics, identifying what we believe is a dislocation in the market. This isn’t the first time that we’ve called out a market dislocation (as we did in November of 2021 amidst the peak of the bubble) and feel strongly that awareness of market cycles and adherence to our long-term fundamental beliefs is what will drive the best product for our founders and the best returns for our investors.

At Equal, we believe that the clean energy transition will leapfrog the centralized grid in emerging markets. The IEA expects demand for power in emerging markets to grow 3x faster than in the US. Renewables will meet the majority of this demand, and should have 6–7x capacity in emerging markets compared to the US in the next 10 years. The WEF expects over $1T in investments to flow into emerging markets in the next 7 years to support this influx of new clean energy infrastructure projects. These projects have also already demonstrated the ability to achieve significantly higher IRRs than their OECD counterparts. Despite this rapidly growing demand, institutional investors have struggled to tap into these projects given lack of access to local developers and lack of data integrity of the underlying projects. Underwriting and investing in a solar project in New Jersey is different from doing the same in Nigeria. This is amplified by the struggles developers face in accessing capital outside their immediate localities, making it even more difficult to afford the IT infrastructure necessary to have robust data supporting these projects (which is ultimately necessary for them to access capital). This dynamic has inhibited the growth of the market for decades. Fortunately, it seems that Odyssey Energy Solutions has cracked the code.

A long-time guiding principle for Equal Ventures’ investment into the retail space has been “Be Mindful of the Power of Platforms.” Platforms are incredibly exciting and dominant businesses. They can produce immense economic efficiency (for both the owner of the platform and its users), but they aren’t without their own set of perils. Platform businesses like Salesforce, Apple and Amazon (all of which have advanced app/developer ecosystems with billion dollar businesses built upon them) have tremendous captivity over not only their customers, but also their business partners and developers working within their ecosystems. These platforms historically have symbiotic relationships with these partners — after all, it’s the success of these partners that drives the utility and differentiation of the overall platform from others). However, we’ve recently seen a repositioning of this posturing that reminds us of the power of these platforms and the potential pitfalls of building upon them.

A few weeks ago, I put out a post on vertical fintech, and in this post, I will be diving deeper into one specific model within vertical fintech: verticalized payroll. In that previous post, I mentioned the difficulty in leading with fintech rather than workflow because of the commoditized nature of many fintech products. Payroll, in a horizontal sense, could also be seen as a commodity offering, but it is a product offering that is embedded within the HR workflow stack and, when applied in a single vertical, is not a commodity given the nuances that must be taken into account for specific markets.