The Zebra, an insurtech poised to achieve unicorn status, isn’t eager to join the herd of fintech IPOs on the horizon in 2021.
Keith Melnick, CEO of the Austin, Texas-startup, told FinLedger he isn’t inclined at this point to head down the IPO path.
“My goal is not necessarily to take the company public, but I try to be pragmatic because I’m not only the CEO, I’m an investor. … I understand the desire to get a monetization event, not just for the investors, but also for the employees,” Melnick said.
Melnick speaks from experience. He was president and co-founder of Kayak when the travel platform went public in 2012. Preparing for an IPO is “a little bit like running a marathon,” Melnick explained.
“The process of getting ready for the IPO is kind of awful,” he said. “The actual moment you cross the finish line is wonderful. So when we went public, that was great. But after you run the marathon, you’re in pain and you feel awful when you wake up.”
Despite that pain, Melnick said an IPO is a “credible” long-term option for The Zebra. But that likely wouldn’t come to fruition until the company has raised more money to fuel near-term growth. After that, The Zebra may ponder an IPO filing, he said.
Since being founded in 2012, The Zebra has raised $101.5 million, most recently a $38.5 million Series C round announced last February. Melnick noted that The Zebra recently achieved two milestones: profitability and a $100 million annual run rate. This year, the company is expected to become a unicorn, meaning its valuation has topped $1 billion.
John Locke, a partner at Silicon Valley VC firm Accel, a major investor in The Zebra, said the company will be able to grow further by focusing on its core product — auto insurance — and by expanding into areas such as homeowners and renters insurance. But over the long haul, Locke wants to see The Zebra evolve into the online platform for “all things insurance.”
“For now, we have the luxury of controlling our own destiny because we’re profitable,” said Locke, who sits on The Zebra’s board. “First and foremost, we really want to be the brand that everyone associates with where they go to buy insurance. If we pull that off in the way that we want, then we’ll have a lot of options for the business, whether it’s M&A or IPO.”