Hippo was valued at $5 billion in March 2021 when it announced its combination with Reinvent Technology Partners Z, a SPAC backed by Reid Hoffman, cofounder of LinkedIn, and Mark Pincus, founder of Zynga. SPACs, at the time, were wildly popular due to the advantages promised by blank-check companies. Merging with a SPAC was believed to be a quicker, and cheaper, route to public markets compared with a traditional IPO. Companies using SPACs could also provide future guidance, which is not allowed with traditional offerings.

The SPAC euphoria came to a brutal halt in 2022 when a broad market downturn resulted in fewer IPOs. The Securities and Exchange Commission has also increased oversight of the sector, proposing a sweeping set of rules in March that would effectively even the playing field among IPOs and SPACs, Fortune reported.

Hippo completed its combination with Reinvent Technology Partners Z on Aug. 2, 2021, and began trading the next day. Unlike shares of many SPAC combinations, or de-mergers, Hippo is trading above its $10 original offer price, closing Tuesday at $15.20. But its valuation has fallen by nearly 93% to $353.6 million. Hippo on Sept. 19 announced a 1-for-25 reverse stock split—shares were trading for less than $1— and completed it 10 days later. On Sept. 30, shares closed at $18.53. A company spokesperson told Fortune the firm’s overall valuation wasn’t affected.

“We would have done better with a traditional IPO,” Rick McCathron, Hippo’s president and CEO, told Fortune.

Founded in 2015, Hippo is one of several insurtechs that sought to disrupt the insurance industry, which has lagged in adopting technology. The company offers home protection insurance and technology that links up with smart home devices that Hippo’s partners provide to consumers. Hippo also offers customers an assessment of their home health risks as well as a home maintenance checklist. It employs 640 people. The company raised $1 billion from its SPAC merger, which included a private investment in a public entity, or PIPE, and a convertible note.

“We have plenty of capital to weather the macroeconomic storm,” McCathron added.

Hippo has suffered from an “insurtech broad brush,” McCathron said. Several insurtechs went public in 2020 and 2021, including Lemonade, Root, Oscar, and MetroMile. Each offers different products to different subsets of the sector. Many have underperformed in the public markets. For example, Lemonade targets millennials with renters, pet, car, and term life insurance. Lemonade soared 139% in its first day of trading in 2020 but has dropped by nearly 74% since then, closing Tuesday at $18.13. Root, which provides car insurance, is off 77% from its first-day close. Oscar offers health insurance and is down about 75%. (Lemonade ended up buying Metromile for less than $145 million.) Lemonade, Root, and Oscar went public with IPOs, while Hippo and MetroMile used SPACs.

The dismal overall performance of SPACs also has affected Hippo. Just six companies—only 3%—of the 199 that merged with blank-check firms in 2021 are trading above their original $10 offer price, according to Renaissance Capital, a provider of pre-IPO research and IPO-focused ETFs.

In addition to a flagging economy, McCathron said the stigmas from insurtechs and SPACs have weighed on Hippo’s share price. “It was likely we would have been down regardless,” he said, “but I don’t think we would have been down as much.”

If Hippo had gone public with a traditional IPO, it would’ve had an easier time attracting analysts who could have helped explain the company’s complexities, McCathron said. Fewer analysts flock to SPACs compared with IPOs, which are underwritten by investment banks and typically assign dedicated analysts to cover those firms. “We’ve had to fight to get analyst coverage,” McCathron said. “It took us a solid year to build up and get the analysts that we do have.”

Hippo likely will be EBITDA profitable in the fourth quarter of 2024, with approximately $400 million of excess cash, McCathron said. The company plans to buy back about $50 million of stock.

Despite the lackluster stock performance of insurtechs, McCathron thinks they have succeeded in one way, which is spurring innovation in a sector that’s shunned it. Many incumbents are starting to do things brought to the market by insurtechs, McCathron explained. He pointed to State Farm, which invested $1.2 billion in ADT last year, and is partnering with the company to provide smart home technology. In late April, Chubb CEO Evan Greenberg said the insurer was “experimenting with various forms of A.I.” and would start rolling out various tools at scale, according to a transcript of Chubb’s first quarter analyst call.

“None of these companies,” McCathron said, “would have done any of those things if insurtech hadn’t forced those changes to the market.”

See you tomorrow,

Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- KoBold Metals, a Berkeley, Calif.-based EV battery mineral exploration company, raised $195 million in Series B-prime funding. T. Rowe Price led the round and was joined by BOND, Standard Investments, Equinor Ventures, a16z, Breakthrough Energy Ventures, BHP Ventures, Mitsubishi Corporation, Earthshot Ventures, and the July Fund. 

- Attovia Therapeutics, a Fremont, Calif.-based immune-mediated disease and cancer biotherapeutics company, raised $60 million in Series A funding. Frazier Life Sciences led the round and was joined by venBio and Illumina Ventures.

- Levit, a Seoul-based shopping app operating company, raised $46 million in Series B funding. DST Global Partners led the round and was joined by BOND, KB Investment, Mirae Asset Capital, Korea Investment Partners, GS Ventures, and Klim Ventures.

- Rose Rocket, a Toronto-based transportation management software provider for trucking companies and 3PLs, raised $38 million in Series B funding. Scale Venture Partners led the round and was joined by Addition Capital, Shine Capital, Scale-Up Ventures, Funders Club, and Y-Combinator.

- Arkon Energy, a Melbourne, Australia-based data center infrastructure company, raised $26 million in funding. Sandton Capital Partners and JGB Management invested in the round.

- Yendo, a Dallas-based vehicle-secured credit card company, raised $24 million in Series A funding. FPV Ventures led the round and was joined by Human Capital and Autotech Ventures. 

- Guardian Agriculture, a Woburn, Mass.-based electric vertical take-off and landing systems developer for sustainable farming, raised $20 million in Series A funding led by Fall Line Capital. 

- ElevenLabs, a London- and New York-based voice technology research company, raised $19 million in Series A funding. Nat Friedman, Daniel Gross, and Andreessen Horowitz co-led the round and were joined by Credo Ventures, Concept Ventures, and other angels. 

- Fero Labs, a New York-based manufacturing process optimization software company, raised $15 million in funding. Climate Investment led the round and was joined by Blackhorn Ventures, Innovation Endeavors, and DI Technology. 

- Sollis Health, a New York-based private urgent care platform, raised $15 million in Series A extension funding. Torch Capital, Strand Equity, Arkitekt Ventures, and Read Capital invested in the round. 

- GoodBuy Gear, a Denver-based online resale marketplace for baby and kid gear, raised $14 million in funding. Interlock Partners and Revolution Ventures co-led the round and were joined by Crawley Ventures, Mana Ventures, Access Ventures, Relay Ventures, and Denver Angels. 

- Augmenta, a Toronto-based building design automation company for the construction industry, raised $11.75 million in seed extension funding. Eclipse led the round and was joined by Hazelview Ventures, BDC Capital’s Deep Tech Venture Fund, and Suffolk Technologies. 

- Parrot, a New York-based deposition transcribing and management platform, raised $11 million in Series A funding co-led by Amplify Partners and XYZ Venture Capital.

- Kitt, a London-based office design and experiences provider, raised $8 million in seed extension funding led by Hoxton Ventures. 

- BetterBrand, a Los Angeles-based food tech company, raised $6 million in Series A funding. VERSO Capital led the round and was joined by Gaingels Fund, Seven Seven Six, Craft Lane, and other angels. 

- Hyperline, a Paris-based revenue platform for B2B SaaS businesses, raised $4.4 million in seed funding. Index Ventures led the round and was joined by Cocoa and other angels.  

- Concordia, a British Virgin Islands-based risk and collateral management protocol for digital assets, raised $4 million in seed funding. Tribe Capital and Kraken Ventures co-led the round and were joined by Cypher Capital, Saison Capital, and others.

- SQUAKE, a Berlin-based carbon calculations provider, raised €3.5 million ($3.82 million) in funding. Simon Capital led the round and was joined by Schenker Ventures and Rivus Capital.

- Orson, a Winter Garden, Fla.-based automated video storytelling platform, raised $3 million in funding. Cyan Banister, Long Journey Ventures, and others invested in the round.

PRIVATE EQUITY

- Analytical Technologies Group, a portfolio company of Reynolda Equity Partners, acquired Holmes Analytical, an Ashford, U.K.-based pharmaceutical laboratory instruments maintenance and repair provider. 

- Axcel Learning, backed by Alpine Investors, acquired ExitCertified, a San Francisco-based IT training and certification platform. Financial terms were not disclosed. 

- Summit Partners acquired a minority stake in TradingHub, a London-based software solutions provider for financial markets. Financial terms were not disclosed. 

OTHER

- Eli Lilly & Co. agreed to acquire DICE Therapeutics, a San Francisco-based oral treatments development company for immune diseases, for $2.4 billion.

- 2ULaundry acquired The Folde, an Austin-based laundry services company. Financial terms were not disclosed.

- Cyara acquired CentraCX, a Melbourne, Australia-based SaaS-based voice of the customer solution company. Financial terms were not disclosed.

- SVB Securities’ management team agreed to buy out SVB Securities from SVB Financial Group. Financial terms were not disclosed.

IPOS

- Kodiak Gas Services, a Montgomery, Texas-based natural gas compression services provider, plans to raise up to $352 million through the sale of 16 million shares priced between $19-22.

- Savers Value Village, a Bellevue, Wash.-based for-profit thrift operator, plans to raise up to $318.75 million through the sale of 18.75 million shares priced between $15-17.

FUNDS + FUNDS OF FUNDS

- Wellington Management, a Boston-based investment management firm, raised $2.6 billion for a fund focused on investing in late-stage private companies. 

PEOPLE

- Carlyle, a Washington, D.C.-based investment firm, appointed John Redett to CFO and head of corporate strategy.