InsurTech Gateway has launched its operations in Australia and is eyeing up the country’s strong B2B2C subsector.
This marks the investment firms first international program and will be run by Australian entrepreneur Simon O’Dell and backed by venture capital firm Envest. The Gateway Australia incubator will fast-track companies to access the local and international market through a 12-week program and ongoing support.
Gateway Australia will offer pre-seed funding and provide physical support for the establishment of the business operations. A global network of mentors is also available to help participating startups.
The startup is expected to join the incubator in the coming months. Following graduation, the startups will have access to both the Gateway Fund and Envest.
When discussing the most promising aspects of the Australian market, Insurtech Gateway Australia CEO Simon O’Dell said, “B2B2C is becoming competitive. We have some strong players in this space. The business model is one where the InsurTech creates an efficient insurance value chain, with no unnecessary friction, and they integrate an insurance function into non-insurance products and services, e.g. retail. Non-traditional insurance brands are offered a compelling business case to take on new revenue, and for the InsurTech, they represent a great way to access pools of risk.
“Outside of Lemonade and possibly a handful of others, insurTechs who have spent time in the market inevitably realise that it’s a tough road to compete on the marketing spend, the Cost of Acquisition, among the large capital strong incumbents. Accessing large sets of customers via retail brands is one of many tactics these B2B2C insurTechs use as an alternative and in doing so, avoid the uphill battle of matching on marketing spend.”
In addition to this, O’Dell went on to state that there are a number of strong opportunities within the conversational AI space.
When moving into a new market, there are bound to be various changes to how things are done. One of the biggest differences is the international expansion mindsets of companies in each country.
O’Dell stated that due to Australia’s smaller consumer market and because its neighbouring markets are further away, InsurTechs build their products with global markets in mind.
He said, “We often see an insurtech who finds a sticking point in the market with their MVP, next moment they’re opening an office in NYC or London and raising a healthy seed round. It happens quickly. The average runway for an Australian insurtech is less than 12 months and >80% are bootstrapping. As such, when there is a hint of product-market-fit and the insurtech achieves a good leverage point from which to raise, they generally strike and strike quickly.”
While Australia’s market is very appetising for InsurTechs, it can be hard to introduce new ideas due to complex regulatory hurdles.
Regulatory hurdles particularly hurt the speed to market for InsurTechs, O’Dell stated. “Post royal commission into the financial services sector, it takes over 8 months to get a license; this is once you’ve canvassed the market and chosen a law firm, and established how you’ll fund the $20-$60k cost (AUD).”
However, O’Dell does not think this affects the country’s ability to attract business and founders to the country. This is thanks to support from the government and its regulator which offer benefits such as &D grants, MVP grants, tax incentives for investors.
InsurTech Gateway launched in the UK in 2017 and has supported InsurTechs including on-demand cover platform ByMiles, flood insurance service FloodFlash, and exposure and risk data aggregator Insurdata.
InsurTech Gateway is seeking further local partnerships in Asia, North America, and Central Europe.
Last month, the investor hit the £30m first close for its latest investment fund.
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