Cybersecurity insurance startup Coalition raises $90M Series C

This morning, Coalition announced that it has closed a $90 million Series C. The funding comes around a year after the cybersecurity insurance startup raised a $40 million Series B that TechCrunch covered at time.

The startup’s new, larger funding round was led by Valor Equity Partners and included participation from Greyhound Capital and Felicis, along with “existing investors,” per the company. Coalition told TechCrunch that its Series C was raised at an $800 million pre-money valuation, making the firm worth $890 million today.

Coalition noted in a release that it has raised $125 million in equity capital in its life. Given that the company’s Series B was generally reported as $40 million, the math didn’t add up. TechCrunch spoke with the company, learning that its Series B was $25 million in primary, and $15 million in secondary. So, the company’s $10 million Series A, $25 million primary Series B, and its $90 million Series C do add up to $125 million, as they should.

The San Francisco-based cybersecurity insurance startup raised its new capital, and nearly reached a unicorn valuation (the $1 billion threshold means less than it once did, of course), on the back of rapid customer growth. Let’s dig into the numbers.

Customers

Coalition’s funding round stood out not only because it represented an outsized Series C, but also because the firm reported an impressive customer growth figure. The startup told TechCrunch that had grown its customer base to 25,000, a figure that was up 600% from “the prior year.”

Landing that many new customers in a year, more or less, made us sit up and take notice; there is a strong connection between customer growth and revenue growth, implying that Coalition’s business was rapidly scaling.

TechCrunch wanted to know more, so we corresponded with Joshua Motta, the company’s co-founder and CEO.

First, we wanted to know if Coalition had juiced its sales and marketing spend in the last year, perhaps pushing its customer number through brute force and heavy spend. According to Matta, the answer appears to be not really:

Coalition’s insurance products are sold by insurance brokers across the country. While we’ve grown our internal sales and marketing team from 5 to 13 people [year-over-year], we’ve appointed over 1,000 new brokers in the same period, each of whom was driven by an interest to help their clients manage growing cyber risks.

Accreting brokers is not the same sort of cost as, say, spending gobs of money on advertising.

As TechCrunch noted at the time of the company’s Series B, “an ongoing threat of breaches and data exposures” has made cyber insurance attractive, so there may be secular tailwinds that are pushing Coalition along, helping boost its customer count.

Matta agrees, telling TechCrunch in an email that “data breaches and cyberattacks are now so commonplace that organizations can no longer afford to ignore them, and there is a growing awareness that insurance is often the only protection from catastrophic financial loss.”

Back to customer growth, TechCrunch was curious if the company had changed its pricing in the last year, perhaps lowering it and thus attracting more customers. Answer from its CEO: No.

But what is changing at Coalition is its size. According to Matta, the company has “made 20 new hires since the outset of March, and anticipates making an additional 100 hires over the next twelve months.”

The staffing-up makes sense, as the company plans to enter the Canadian market. TechCrunch asked what markets are coming next. According to the company: The UK, Europe and Australia.

Now we have to wait until we get another growth metric from the firm. Perhaps next time we’ll get a revenue figure, instead of merely a customer result. But hey, better some data than no data.

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