Yep, there is plenty of money around. The latest news from Wefox;
wefox, the Berlin-based digital insurance company has raised a record US$650 million for its Series C funding, resulting in a post-money valuation of US$3 billion. This round represents the largest Series C to date for an insurtech globally.
wefox intends to invest the proceeds in expanding into the US and Asia within the next two years while strengthening its presence in its existing markets in Germany, Austria, Switzerland, and Poland.
Target Global led the round, with participation from existing investors including OMERS Ventures, Gsquared, Merian, Horizons Ventures, Eurazeo, Mubadala, Creditease, Salesforce Ventures, Speedinvest, Alma Mundi Ventures, Victory Park Capital, GR Capital, Mountain Partners, Seedcamp, and Sound Ventures. New investors include LGT, Partners Group, Jupiter, and FinTLV.
Launched in 2015 by CEO Julian Teicke and founders Fabian Wesemann, and Dario Fazlic, wefox has been considered one of Europe’s most promising unicorns. In 2020 wefox reported a profit for its insurance business, wefox insurance, making it the first digital insurance company to reach profitability. Furthermore, wefox’s revenue increased to $143M in 2020, doubling its 2019 revenue.
wefox is a fully licensed digital insurance company that sells insurance through intermediaries and not directly to customers, which has resulted in significant growth with a clear path to profitability.
Mr. Teicke added, “This is why wefox has built a huge network of advisors across Europe. We believe that insurance is all about people, and we believe that technology is an enabler and should not replace the human connection. We have set out to improve the customer experience for both our advisors and our customers through technology to increase customer satisfaction, reduce customer acquisition costs, increase cross-selling, and decrease churn.”
wefox continues to deliver a loss ratio supported in large part by its straight-through-processing (STP) of more than 80%, and a central product factory that swiftly distributes new products to the market due to its full stack insurance technology.
Surely we are reaching South Sea Bubble territory soon, as funding records keep getting broken? There has to be a rational analysis of the actual future value of companies and the services they offer.
Of course the tech sector has been here before about 20 years ago, when the dot.com mania for e-tailers distorted the Dow and LSE for a few months until people realised that setting up a website to sell clothes, food or other services wasn’t another industrial revolution. It was just marketing – and in reality, people’s homes did not have the technology to make mass online purchasing a reality. Those of us old enough to recall Ask Jeeves, Alta Vista, Lycos, AllTheWeb and more understand that search engine start-ups often promised the earth, but delivered little long term.
Selling insurance online is not a new concept. Using AI to automate parts of the process isn’t ground-breaking either. Refining a process so that it becomes more personalised, accurate and offers fairer value to most customers is undoubtedly data driven gold-dust. But betting on which 4 or 5 brands will eventually win the war of insurance distribution on-demand is a high stakes game of poker.