Beyond IPO: What is The Future For Lemonade?

Meta description: Lemonade Insurance Company is a New York-based insurance technology company that offers renters and home, content and liability policies to consumers in the US, Netherlands, and Germany.


Lemonade is a New York-based company using technology to offer peer-to-peer personal insurance services. Founded by Daniel Schreiber, a former president of Powermat and Shai Wininger, a cofounder of the online freelance marketplace Fiverr, the company had one aim: to make insurance more affordable, more precise, and socially impactful.

Lemonade’s IPO, July 2, 2020.

Indeed, it has been living up to that. The company uses a business model that only charges 25% of a customer’s premium while setting aside the remaining 75% for reinsurance purchase and payment of claims. Also, in a policy that is notably different from that with which traditional insurance is run, the insuretech company gives its users the liberty to choose a nonprofit to which their unclaimed premiums should go.

Lemonade went beyond the US and launched its first European operation in Germany in June 2019. The company decided to expand its AI-powered insurance policy, Policy 2.0, to Germany because of the country’s forward-thinking, digital-first consumers. For market expertise and networks, it entered into a multi-year strategically-oriented reinsurance agreement with AXA Germany.

Then, on April 2, 2020, Lemonade launched its operations in the Netherlands. On this, Daniel Schreiber said, “We chose the Netherlands for our next European launch due to the many requests we received from Dutch consumers asking us to come there next.” The insurance product Lemonade introduced to the Netherlands was also based on its Policy 2.0.

Policy 2.0 is an open-source radically simplified insurance policy developed on the ideal way by which insurance is meant to be done in the 21st century. Designed for ordinary people, it is without unnecessary jargons, thereby making it consumer-friendly. It is short, easy-to-understand and transparent. This policy is a necessary departure from the dated and dense ones that currently dominate the market.

On July 2, Lemonade listed on the New York Stock Exchange (NYSE) under the ticker LMND making over $319 million in the process. In the IPO, the company raised 11 million shares at a unit price of $29, much higher than its previously indicated price range of $23 and $26 per share.

Business Model

The insurance industry is a notorious one. From mismanagement to non-payment of claims and excessive politicisation of operations, it has been caught up in whirlwinds of different scandals. However, of all those flaws, perhaps, the most important one why many individuals do not bother taking insurance policies is lack of trust.

Beyond that also is the unnecessary complications associated with the process. Therefore, there is an important need for the way insurance is done to be rethought. With Lemonade, we are getting that rethink. The company is combining technology, contemporary design and behavioral economics to make insurance more humane and more easily adopted.

Leveraging those tools, the company is truly rebuilding insurance from the ground up. Besides charging a flat fee (a practice unconventional of insurance companies), Lemonade also gives its customers the possibility to disperse underwriting profits to any charity of their choice.

The company did not pioneer digital peer-to-peer insurance services, though. Before Lemonade, most notably, there have been the Berlin-based Friendsurance and the London-based Guevara. However, it has been the fastest growing of its peers. Apart from the exceptionally tech-centric nature of Lemonade’s operations, another reason for its popularity is its millennial-focused business model.


In December 2015, Lemonade secured $13 million from Sequoia Capital in one of the largest seed investments in the history of the firm. Then in August 2016 and December of the same year respectively, the company also received $13 million in funding and another $34 million in Series B funding round from XL Innovate. Other Lemonade’s Series B investors include Alphabet Inc., Google’s parent company, Thrive Capital, and Tusk Ventures.

In a Series C investment round in December 2017, Lemonade received $120 million in funding from the Tokyo-based SoftBank. In April 2019, after a Series D financing round, the insurance company announced  that it had received a further $300 million investment, bringing the total money raised to $480 million. By the time Lemonade IPOed, SoftBank’s stake had translated to 21.8% of its shares.

In 2018, itssecond full year of business, Lemonade had 425,000 customers 90% of whom were buying property insurance for the first time and took in $57 million in premium revenue from them. Operating in 22 states of the US then, the company planned to expand its operations to all the 50 states of the country and also double its revenue in the process.

And indeed, for 2019, Lemonade had amazing financial information about its operations to show. Although itrecorded a net loss, it was able to grow its revenue by nearly 200% – from the $22.25 million it posted in 2018 to $67.3 million. For the first quarter of 2020, the insurance company also went on to post $26.2 million, representing a revenue jump of 138%.  However, again, it showed a net loss of $36.5 million.


Lemonade’s impressive IPO outing should still not hold us back from asking critical questions about its future. Yes, the IPO was oversubscribed, suggesting that many investors foresee growth ahead for it. Despite being offered at $29, the stock catapulted more than 130% before market close.

However, beyond that, we should cut down to why Lemonade would actually make a good investment. First, that the online provider of home and renters insurance has not turned in a profit yet is not a concern: this is not uncommon in the early stages of disruptive companies with high innovative drive. As a result, what should be a concern is whether it is well-positioned to achieve sustainable growth.

Second, Lemonade’s innovativeness has been an early advantage. Its target demographics are individuals who are highly receptive to it. No wonder, roughly 75% of its current customers are below age 35. This focus on younger crowd is expected to be another key driver of its growth. Plus, the ease of use of its products – it takes just two minutes to buy insurance via the Lemonade app – is also expected to consolidate their increasing adoption.

From the listing price of $29, Lemonade (NYSE: LMND) is now trading at over $70. With ample room for growth, what better time to get yourself some Lemonade if not now? Now, you can even skip the sugar.