Diverse Universe of Emerging Market Deals

Knix, a Toronto-based women’s intimates company, and Beam Dental, a Columbus, OH, dental insurer disrupting the industry with machine learning.

Knix was started with one goal: to make women feel more comfortable in their own skin by redefining intimates. Knix has pioneered the use of patented bonding technology to create seamless, chafe-free designs, as well as fabrics with built-in support structures to create the best wire-free bras and functional underwear in the world.

Knix’s first product was a line of underwear designed to help women deal with “little leaks.” Since then, the company has added bras, sports bras, underwear, tanks, bodysuits, accessories, swim, maternity, hosiery, lounge, and a teen line — with more planned.

We recently participated in the company’s Series B led by TZP Group — a PE firm investing in tech, business services, and consumer products. Other backers have included investors with knowledge of the women’s intimates space as well as DTC e-commerce.

What We Liked

• Increased demand for women-focused products. Knix is meeting women’s demands for products that speak to them. Intimates are growing at a 7.2% CAGR and expected to hit C$250B globally in 2022.
• Compelling business metrics and profitable business model. Knix has grown revenue substantially, delivering a profit — with very little capital raised. In addition, they shown’s strong customer growth, repeat customers, LTV:CAC, organic revenue, and unit economics.
• Continuous growth. Knix has steadily produced a pipeline of products to fuel growth. That is continuing in 2021 with a shapewear line, more retails stores, and a focus on growing U.S. business.
• Experienced team ready to take Knix to next step. The CEO has guided Knix through substantial growth and built a team to scale.
• Attractive valuation. Knix is based in Toronto. We believe that the Canadian location may have helped keep valuations attractive.

Beam Dental is the industry’s first and only digital dental insurance provider — and also its fastest growing. They have catapulted dental insurance to the next level by using machine learning to more efficiently price premiums and underwrite risks. Beam offers an easy-to-use, mobile platform that saves time and money for consumers, providers, employers, and brokers. With PPO policies available in more than 40 states and access to over 400,000 dental groups, Beam is rapidly capturing market share.

We participated in a Series E, led by growth-stage focused Mercato Partners (exits in fintech and healthtech). Other investors included Drive Capital, founded by former Sequoia Partners; and Georgian Partners, one of the largest VCs in Canada; as well as two Fortune 500 insurers.

As noted here, the CEO and Founder Alex Frohmeyer feels his company’s location in Columbus, OH, is a plus. Advice from their backer Drive Capital encouraged “Froh” to choose Columbus for his HQ.

What We Liked

• Market ripe for disruption. The $70B dental insurance market with mainly low-tech incumbents is ripe for disruptors such as Beam.
• Very strong commercial traction. Beam’s revenue quadrupled in 2019 year over year, nearly doubled in 2020, and top-line is expected to double again in 2021. In one year, it also doubled clientele to 5,000 businesses and 100,000 members (as of June 2020).
• Strong operational metrics. Beam has moderate operational costs, a 100% net dollar retention, and an industry-beating 69% loss ratio to premiums earned — a key profitability measure.
• Significant moats. There are high barriers to entry in this industry due to capital needs and complex regulatory requirements. Beam Dental has already met regulatory requirements in over 40 states.
• Exit options. There is noted appetite in the markets for insurtech companies. Two examples: Homeowner insurer Lemonade’s IPO at a $1.7 billion pre-money valuation and Prudential’s acquisition of Assurance for $2.4 billion.

Click here to read a feature story on Beam Dental.