- GeneralSPAC
- March 4, 2021
- 5 minutes read
New SPAC Deal: Home Insurance Startup Hippo
Amid a flurry of SPAC mergers as of late, the latest technology company to tap into the boom and reach…
Amid a flurry of SPAC mergers as of late, the latest technology company to tap into the boom and reach a deal to merge with a special-purpose acquisition company (SPAC) is Hippo, a home insurance startup that makes use of satellite imagery and smart home sensors to gauge and offer better home insurance policies.
Hippo will merge with Reinvent Technology Partners Z (NYSE:RPTZ), a SPAC formed by the respective founders of LinkedIn and gaming company Zynga, Reid Hoffman and Mark Pincus.
- Hippo will merge with Reinvent Technology Partners Z in a deal that’ll hand it over $230 million of cash held in trust by the SPAC, plus a $550 million PIPE round to be led by existing investors Dragoneer, Lennar, and Ribbit Capital.
- The PIPE round will value Hippo at $5 billion.
- Following the merger’s completion, Hippo expects to have $1.2 billion of cash at hand, fueled by the funds from its SPAC deal plus venture funding that it’s already raised. A hot insurance startup, Hippo has raised over $700 million in venture funding, with its last round being a $350 million cash injection from a Japanese insurance giant in November 2020.
- Hippo was founded just six years ago and is now set to go public in a deal that values the company at $5 billion. Such a relatively short time frame from start to a $5 billion exit implies rapid growth and strong business prospects for the company.
- Hippo is targeting a US home insurance industry that’s expected to reach $140 billion by 2025. The company aims to get a foothold for itself in the very large and competitive home insurance market with the help of technology, in its case harnessing satellite imagery and smart home sensors to gauge and offer home insurance policies.
Hippo is the second company that’ll be taken public with a SPAC formed by the duo of Reid Hoffman and Mark Pincus. The other is the electric aircraft maker Joby Aviation, which agreed to its own SPAC merger barely a week ago.
Hoffman and Pincus have formed and debuted two SPACs on the public markets, the two of which have now found merger targets. They recently launched a third to raise $850 million, apparently seeking to make their mark as SPAC moguls.
