Another tech company in the real estate industry is going public through a SPAC. This time it’s Hippo, a company that is digitizing the home insurance process.
A SPAC is a "blank-check" company designed specifically to raise money to then find a private company that can help take it public through a merger. In this regard, if you’re investing in a SPAC, you’re essentially investing in the management team's ability to find a suitable candidate to take public in the near future.
This practice has recently become quite popular in the real estate industry. Reinvent Technology Partners Z (“Reinvent”) (NYSE:RTPZ) is the group leading this SPAC. LinkedIn Co-Founder Reid Hoffman is co-lead director of Reinvent.
More on Hippo
Hippo is taking a more modern approach to home insurance through a combination of customized offerings and a more proactive approach. The company states in its press release: "Founded in 2015, Hippo’s goal is to make homes safer and better protected by taking a proactive approach designed to prevent losses. Harnessing real-time data, smart home technology, and a growing suite of home services, the company is creating the first vertically integrated, end-to-end home protection and insurance platform."
For example, Hippo reached out to customers in Texas ahead of the recent storms to help them prepare for frozen pipes and water damage. This included offering support via live video calls to prevent and resolve any issues that could be addressed by homeowners on their own.
Hippo’s mission is to make it easy for homeowners to get the coverage they need, which includes avoiding coverage gaps while simultaneously excluding coverage for things people don’t need. The company enables customers to buy policies online, through an agent, or with one of the company’s partners. Hippo built its own underwriting engine that provides quotes in under a minute and allows customers to purchase in just five minutes on average.
Hippo’s products are currently available in 32 states, while the company expects to make its products available to 95% of the U.S. population by the end of 2021. The company launched in 12 new states last year.
This deal, which will value Hippo at $5 billion, is expected to close in mid 2021. The merged entity is expected to have approximately $1.2 billion in cash at closing, which includes the $230 million that Reinvent received in its late 2020 initial public offering (IPO).
Hoffman gave his take on the deal: