Insurance technology companies took center stage in the month of February, attracting the most investor dollars of the various financial technology subsectors that S&P Global Market Intelligence tracks. Overall funding in the financial technology sector declined about 10% from the prior month, however, based on the disclosed value of deals involving private U.S.-based companies that closed in each period.

Two health-insurance-focused startups were key drivers of the $216 million that flowed into insurtech. These were CollectiveHealth Inc. and Bind Benefits Inc., which closed on $110 million and $60 million funding rounds, respectively. Both provide tech solutions to companies that self-insure, i.e. provide health coverage for their employees with their own money rather than using an outside insurance company.

CollectiveHealth offers a series of analytics tools that help employers keep tabs on their plans. The San Mateo, Calif.-based startup also provides the support function that an insurer would typically handle, answering questions from employees about their coverage.
Bind has a similar strategy, as a third-party administrator, but one of the key differences is that it provides on-demand insurance, a hot trend in the insurtech world at the moment. While companies like Sure Inc. and Trov Inc. have applied the on-demand concept to property and casualty lines, Bind believes the same model can be used for health insurance. In addition to a baseline level of coverage, Bind allows customers to add coverage for other risks when it is needed.
Another important service for companies using the self-insured approach is a stop-loss insurer. This is an insurer that pays claims above a certain limit, insulating the insured from catastrophic claim levels. CollectiveHealth and Bind have both found partners in the insurance world to offer this. CollectiveHealth uses Sun Life Financial Inc., which, in addition to this agreement, invested in CollectiveHealth's latest round. Bind uses PreferredOne Insurance Co., which is located in Bind's home state of Minnesota.
In addition to Sun Life, CollectiveHealth received capital from a subsidiary of Abu Dhabi-based sovereign fund Mubadala Investment Co., which we highlight because it also invested in the second-largest transaction of the month, a $100 million round for Pollen Inc. With roughly $127 billion in assets, Mubadala invests across a wide variety of industries and geographies, according to its website. But for our purposes, the focus is on Mubadala's venture capital arm, which launched in October 2017 and made the investments in CollectiveHealth and Pollen. The San Francisco-based team at Mubadala Ventures oversees a $400 million early growth venture capital fund, a $200 million ventures fund of funds, and Mubadala's $15 billion commitment to the SoftBank Vision Fund.
With regard to companies that were incorporated in February, one that caught our eye this month was Gatsby Digital Inc. The company provides an options trading mobile app that offers free trades and a built-in social feed so that the user can see how others are trading. The apps are not yet available for download but are coming soon to the App Store and Play Store for Apple and Android users, respectively.
Gatsby Digital might be trying to emulate the success of Robinhood Financial LLC, which launched in 2015 and by late December 2017 reported having over 3 million users. This is staggering growth when viewed in the context of E*TRADE Financial Corp., which is a household name and reported 3.6 million brokerage accounts as of the end of 2017. Robinhood is also on par with the number of accounts Scottrade Financial Services Inc. had at the time it sold. Its acquirer, TD Ameritrade Holding Corp., reported that Scottrade added approximately 3 million funded client accounts to TD Ameritrade's retail operations.
But regardless of whether Robinhood is a role model for Gatsby Digital, it is certainly a competitor. While Robinhood initially made a name for itself in equities trading, it did a limited roll-out of a commission-free options trading service in December 2017 and said it expects to do a full release in 2018.
