The Zebra Raises $150M - Austin's Newest Unicorn

The Zebra Secures $150 Million in Series D Funding

The Zebra, an insurance comparison platform headquartered in Austin, Texas, has successfully completed a $150 million Series D funding round. This achievement elevates the company to unicorn status, signifying a valuation exceeding $1 billion.

Significant Growth and Valuation

This latest funding represents a considerable increase compared to the $38.5 million Series C round raised in February 2020. While the company previously refrained from disclosing its valuation, it has now confirmed a “substantial increase” to over $1 billion.

Investment Details

Although The Zebra did not publicly name the lead investor for its Series D round, sources indicate that London-based Hedosophia spearheaded the investment. Existing investors, including Weatherford Capital and Accel, also participated in this funding event.

The total capital raised by The Zebra now amounts to $261.5 million since its founding in 2012. This round surpasses the combined total of all previous funding rounds.

Funding Structure and Allocation

According to Keith Melnick, CEO of The Zebra, the funding consists entirely of primary capital, with no debt or secondary sales involved.

Expansion of Insurance Offerings

Initially focused on auto insurance through a real-time quote comparison tool, The Zebra has expanded its services to include homeowners insurance. The company intends to further broaden its portfolio to encompass renters and life insurance. A bundled home and auto insurance product has recently been launched, though auto insurance remains the primary driver of growth.

Benefiting from Digital Transformation

Like many companies in the financial services sector, The Zebra has experienced significant benefits from the increased consumer adoption of digital services since the onset of the COVID-19 pandemic.

Impressive Financial Performance

The company has been transparent about its financial results, reporting a doubling of net revenue in 2020 to $79 million, compared to $37 million in 2019. March marked a record-breaking month, with revenue reaching $12.5 million, projecting an annual run rate of $150 million for the current year.

Furthermore, revenue per applicant has increased by 100% year-over-year. The Zebra has also expanded its team to over 325 employees, up from approximately 200 in early 2020.

Strengthened Carrier Relationships and Branding

“We’ve definitely improved our relationships with carriers and seen more carrier participation as they continue to embrace our model,” stated Melnick. “And we’ve leaned more into brand marketing efforts.”

Brief Period of Profitability

The company even achieved profitability for a short period last year, described by Melnick as “unintentional.”

Strategic Use of New Capital

“We’re not highly unprofitable or burning through money like crazy,” Melnick explained to TechCrunch. “This new raise wasn’t to fund operations. It’s more about accelerating growth and some of our product plans. We’re pulling forward things that were planned for later in time. We still had a nice chunk of money sitting on our balance sheet.”

The Zebra intends to utilize the new capital for increased hiring and to further strengthen its brand presence. Plans include a national advertising campaign and the development of tools and information to position the company as an “insurance advisor,” extending beyond a simple referral service.

The company also aims to leverage machine learning to deliver more personalized experiences and results to its users.

Building Brand Recognition and Customer Lifecycle

“We are accelerating our efforts to make The Zebra a household name,” Melnick said. “And we want a deeper connection with our users.” The goal is to support consumers throughout their insurance journey, from renters to homeowners.

Future Outlook and Exit Strategy

While an Initial Public Offering (IPO) remains a possibility, Melnick emphasized that it is not the company’s immediate focus. He prioritizes continued company development and believes that the optimal exit strategy will emerge organically.

“I definitely try not to get locked on to a particular exit strategy. I just want to make sure we continue to build the best company we can. And then, I think the exit will make itself apparent,” Melnick said. “I’m not blind and am very aware that public market valuations are strong right now and that may be the right decision for us, but for now, that’s not the ultimate goal for me.”

A Promising Future

Melnick believes the company has only begun to realize its potential. “This is a big milestone, but I do feel like for us that this is just the beginning,” he stated. “We’ve just scratched the surface of it.”

Industry Recognition

Early investor Mark Cuban views the company as having transitioned beyond the “startup” phase, describing it as a “full fledged tech company” addressing significant challenges within the $638 billion insurance industry.

Accel Partner John Locke highlighted the firm’s increased investment, citing confidence in The Zebra’s current trajectory and future potential. He emphasized the growing value of a centralized comparison platform in the increasingly crowded insurance market.

“In an increasingly noisy insurance landscape that includes insurtechs and traditional carriers, giving consumers the ability to compare everything in one place is is more and more valuable,” he told TechCrunch. “I think The Zebra has really seized the mantle of becoming the go-to site for people to compare insurance and then that’s showing up in the numbers, referral traffic and fundraise interest.”