Kin Insurance, a homeowners insurance startup, is in talks to raise around $75 million to $100 million after it pulled the plug on a deal to go public via SPAC merger, according to three sources with knowledge of the matter.: This is likely to be a good outcome for Kin. With the current disconnect between the private and public markets, some companies are choosing to spurn the volatile public realm for venture capital and private equity investors willing to offer better terms.
Earlier this month, fintech startup Acorns walked away from its own $2.2 billion SPAC merger, saying it plans to raise additional funding from the private markets at a higher valuation.: Markets have been especially harsh to insurtech companies, raising concerns that Kin will be unfairly battered if it goes public. Shares of companies like Lemonade have dropped like stones in recent months.: Existing investor QED is said to be leading the round, with other new names also participating.
The headline valuation is likely to be below $1 billion, the sources say. While that may look lower than the $1 billion-plus figure cited when the company announced its July SPAC deal, the outcome is comparable — if not better — for investors. That's in part because assumptions made in the proposed SPAC valuation are different from those made for this new round. SPAC valuations are, after all, a bit of a black box.
Kin's last private round of funding put the company's valuation at around $500 million — meaning, even without the SPAC, the deal represents a jump. Moreover, Kin won't have to give up shares to pay the sponsor.it is in the process of fundraising from the privates, but declined to comment on the specifics.: The disconnect between private and public market valuations is creating a rare kind of investor arbitrage.
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