Cybersecurity insurance startup Coalition has been on a fundraising tear.
The five-year-old San Francisco company has raised a new round every year since 2018 including two last year — a $175 million Series D in March and a $205 million Series E in November. And on Friday, it announced $250 million in new funding from a Series F round that boosted its valuation to $5 billion from $3.5 billion at the end of 2021.
The company provides what it calls “active insurance” for cybersecurity threats, a combination of more traditional coverage and active monitoring to reduce cybersecurity risks. It says this reduces claims by 70%.
The latest funding round included new and existing investors such as Allianz X, Valor Equity Partners and Kinetic Partners, according to a press release. Other investors include T. Rowe Price, General Atlantic, Index Ventures, Felicis Ventures and Sam Altman, according to PitchBook.
"We now have five years of not just writing policies and doing security scans but also claims data and incident response data coming back to us which has helped us build on our strategic advantage," Chief Marketing Officer Dylan Steele told me.
Coalition was co-founded in 2017 by CEO Joshua Motta and John Hering, and the company currently has more than 500 employees with over 10% of its workforce based in the Bay Area. The company recently moved into a new office at 55 2nd St. in San Francisco, which it says has desk space for around 70 people.
The company also says it now has a gross written premium run rate of $775 million as of the end of June, which is more than double over September when it reached a run rate of $325 million. Its customer base has also tripled to 160,000 in June from 52,000 in September, and the company says its revenue has increased 200% year-over-year.
"We're in a strong position going forward to be able to see the value of Coalition's investments compound both in the ability to gain more customers and the ability to bring the cost of serving down," Steele said. "Insurance is unique. There's not just the revenue that comes in but there's also the losses that you pay out that are incurred by your customers. So, reducing those losses over time with a data advantage, we've been able to show a reduction in loss significantly."
The company expanded into Canada in early 2020 and plans on entering the UK later this year.
Coalition is also still working towards an eventual public offering, Steele told me, despite the overall market downturn.
"This round gives us flexibility and lets us pick the timing that's right," Steele said. "The market will dictate when the timing is right, but that's ultimately the goal that Coalition is striving for."
The company is poised to capture market share in a growing industry. Data breaches increased more than six-fold between 2005 and 2020, according to Statista, and on average, cyber attacks against European and North American companies cost between $24,000 to $504,000 in 2020, depending on the size of the company.
There have been several high-profile cybersecurity incidents over the past few years.
In 2021, the largest fuel supplier in the country, Colonial Pipeline, was forced to shut down and pay more than $4 million-worth of bitcoin as a ransom. Meanwhile, the SolarWinds breach compromised anywhere between 30,000 to 250,000 Microsoft Exchange customers, and Howard University was also forced to shut down due to a ransomware attack.
In 2016, San Francisco’s Municipal Transit agency was also attacked in an apparent ransomware incident that affected some of its computer systems.
