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The Midwest can now call itself home to another member of the unicorn club.
Columbus, Ohio car insurance startup Root Insurance announced today that it has raised a $100 million series D round. That’s a larger-than-usual raise for many Midwestern startups, but today’s raise was made even more notable by the fact that it now values the company at $1 billion.
Today’s round was led by Tiger Global, with investors including Redpoint Ventures, Ribbit Capital, and Scale Venture Partners also joining.
Root Insurance last raised a $51 million series C in March. Cofounder and CEO Alex Timm told VentureBeat in an email today that the company wasn’t looking to raise a new round of funding, but that “we were open to the conversation with Tiger as we knew the extra capital could help accelerate our expansion.”
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Timm, a former consultant for insurance conglomerate Nationwide, cofounded Root Insurance with Dan Manges in 2015. The company aims to provide cheaper car insurance policies by incorporating “individual driver behavior” into quotes, rather than focusing just on standard demographic data, like how old the driver is or how many accidents he or she has been in. Interested customers download Root’s app, and for 2-3 weeks the app will gather sensor data while the customer drives, to determine things like how often a driver tailgates.
The $1 billion valuation is the most eye-catching number from today’s announcement, but Root Insurance also has some other promising growth metrics to point to. When Timm spoke with VentureBeat back in March, the company was operating in 12 states. One of the biggest hurdles Root Insurance has faced in expanding is that it needs to establish the proper regulatory framework before it can begin offering policies in some states. Some states currently don’t allow car insurance companies to underwrite policies based on some of the criteria that Root Insurance uses.
Today, Root Insurance is available in 20 states — and has been given the greenlight to begin operating in another 8. It plans to be in all 50 states and Washington D.C. by the end of 2019.
“Our growth the past six months has exceeded even our own expectations,” Timm said in an email to VentureBeat today. “We went from writing just shy of $4 million of direct premium in all of 2017, to nearly $23 million in the first half of 2018.”
Additionally, Root’s workforce has grown from about 80 employees in March to 140 today (mostly full-time). Timm said that the company plans to create more than 400 full-time jobs in Columbus by 2021.
As of 2017, about three-quarters of all VC-backed startups to reach more than $1 billion were located in Silicon Valley — so it’s noteworthy whenever a startup in other parts of the country reaches that milestone.
Some of the other notable startups in the Midwest that have recently reached more than a billion-dollar valuation include Duo Security (which Cisco recently announced that it intended to acquire for $2.35 billion) and Outcome Health — though the latter was plagued by accusations of fraud and an investor lawsuit shortly after raising a mammoth $600 million round. As with any Valley startup, the real test for Root Insurance will come as it tries to deliver on that valuation.
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