Digital insurance startup Wefox raised $650m in a post-money valuation of $3bn led by Target Global.
The round, which is the largest Series C to date for an InsurTech globally, also saw 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.
The company is currently live in five markets right now and is working on expanding to the US and Asia within the next two years while strengthening its presence in Germany, Austria, Switzerland and Poland.
Launched in 2015 by Julian Teicke, Fabian Wesemann and Dario Fazlic, Wefox sells insurance through intermediaries and not directly to customers. Most insurance products are still sold by agents and that’s why Wefox has 700 agents selling Wefox products exclusively. It also partners with associate brokers — around 5,000 can distribute Wefox products.
While it is focused on personal insurance products, such as household insurance, motor insurance and personal liability insurance, the firm is planning to launch 20 more this year including property and casualty insurance, pet insurance, health insurance, life insurance among others.
The company has been investing in automation so that common processes are handled by an algorithm. Currently, 80% of its processes are handled automatically.
In 2020 Wefox saw its revenue increase to $143m in 2020, doubling its 2019 revenue – a figure it aims to surpass manyfold this year.
The reason for Wefox’s growth is that its strategy of offering digital tools that enable insurance agents to streamline and automate labour-intensive processes. Agents sell nine out of every ten policies in Europe, leaving direct-to-consumer competitors like Lemonade fighting for a smaller piece of the market, it said.
Commenting on the company’s future plans Teicke said, “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.”
Echoing a similar sentiment, Wesemann said Wefox’s own-brand portfolio, launched in 2018, accounted for 30% of revenue last year. Commissions made up the rest. He added, “This investment strengthens our growth strategy and moves us closer to realising our vision – to prevent 30% of risks from happening – in order to offer the most advanced service to our customers. As part of this, we want to ensure that we are building the technology to automate our business processes to have a STP ratio consistently above 80%.”
The funding means Berlin-based Wefox has grown in value threefold since tapping investors in 2019. The move follows big raises by local startups Trade Republic, an online stockbroker and quick-delivery firm Gorillas.
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