Next Insurance, the online insurance provider for small businesses, is negotiating a deal to raise new capital in a round that would value the FinTech startup at $2.25 billion, sources told Bloomberg.
CapitalG, the private equity firm owned by Alphabet Inc., Google’s parent company, is in talks to lead the $250 million funding round for the Palo Alto, California-based insurer, the news service reported.
If successful, it would double Next Insurance’s valuation from its last fundraising. Last fall, it raised $250 million from Munich Re Group, the Munich, Germany-based reinsurer, which gave it a valuation of more than $1 billion.
The company offers policies to small businesses from general contractors to personal trainers. Next Insurance is also supported by investors including and American Express Ventures, Nationwide Mutual Insurance Co. and Redpoint Ventures.
Next Insurance and CapitalG did not respond to requests for comment.
Sofya Pogreb, chief operating officer at Next Insurance, told PYMNTS she had a front-row seat to the ways the pandemic impacted small business policyholders. Insurance firms too have been hit with their own challenges during the pandemic, impacting everything from coverage options to the claims payouts, she said.
Pogreb said the industry has a chance to embrace market disruption in ways that can strengthen customer relation and get capital into the hands of business owners who desperately need it as quickly and painlessly as possible.
“Insurance is a major expense for most small businesses,” she said, noting business owners should reconsider whether the products and services they’re paying for are competitively priced.
In addition, she said small businesses should reexamine their products and explore whether there is an opportunity to enhance coverage, not only to protect themselves but to potentially introduce a valuable competitive differentiator.
“This is a good time to think about your needs as a business, and where insurance can make you more competitive in bidding for jobs or obtaining a project,” said Pogreb.