Raincoat raises $6.5 million
Raincoat closed a $6.5 million seed funding round bringing its total funding to $11 million. The funding round was led by Two Sigma Ventures , along with European based VC firm Mundi Ventures, Revolution’s Rise of the Rest Seed Fund and EleFund.
Founded in 2019, Raincoat, a team of ~20, looks to offer automated insurance solutions that enable financial institutions, governments, and insurers to provide immediate payouts in the event of climate events and natural disasters.
Its embedded parametric insurance model enables distribution channels to offer protection against the occurrence of a specific event given fixed parameters, such as the magnitude of the event – instead of the magnitude of losses incurred. Raincoat works with financial institutions, governments, and insurers to deploy automated, end-to-end products for protecting individuals and small businesses affected by these natural disasters.
This round of capital will support the company’s expansion to new markets to provide FEMA-like services after particular disasters such as hurricanes and earthquakes in the Caribbean, Mexico, and the Gulf Coast, wildfires in the west, and threats such as flood, drought, and excessive rain in Colombia and Brazil.
Bottom Line: Parametric insurance requires a trigger and the ability to estimate the loss, but must be a win-win for both the insurer and the insured. The “estimate part” is where things get trickier. In other words, the absence of “messy humans” might lead to even greater mess.