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How an insurance startup became the highest funded Insurtech of Germany

The Berlin insurance startup Wefox has just announced a round of financing over 110 million euros. This is the highest amount of funding for a German Insurtech startup. Last year, the total financing for German insurance startups was just 150 million euros, as shown by a survey by Finanzchef24.

Compared to the banking startup N26, Wefox is meanwhile still relatively unknown in public. In the startup scene, the company of founder Julian Teicke in recent years by celebrity investors such as Aston Kutcher and Lena Meyer Landrut and a lawsuit by rival Lemonade made headlines.

How does the business model of Wefox work?

Via the Wefox platform insurance brokers can manage the policies of their customers digitally. Customers also have their insurance via Wefox app and can report claims or clarify questions. For each insurance, which looks after a broker, he receives a commission from the insurance provider a so-called brokerage. According to the company, the startup will receive 30 percent.

In addition, the digital insurance One launched a year ago, the liability and home insurance sells. With another platform, Wefox wants to help other insurance companies with sales in the future. Wefox, One and the platform belong to the Wefox Group, which has also received funding.

How much revenue does the startup make with it?

Wefox claims to have handled a total of 13 million euros through its brokerage platform in 2017. This is the amount the brokers take through their insurance commissions. This gives the startup a share of about 30 percent. So made about four million euros in sales. In 2018, it claims to have 35 million euros on the brokerage platform and about ten million euros in sales for the company. Aimed at 50 million, but the delayed round of financing had also made their sales, as Julian Teicke explained in the conversation.

What is the impact of Insurance One, which belongs to the Wefox Group?

One co-founder Alexander Huber spoke of 70,000 customers after one year in an interview with Gründerszene. In total, the Wefox Group has 400,000 customers, according to the company. The broker app Wefox thus comes to 330,000 customers.

Was not even a major round of financing planned?

Gründerszene and other media reported about a financing round targeted by Wefox with a magnitude of about 160 million euros. According to Julian Teicke, there should be a second part of the financing round with borrowed capital. Wefox wants to buy existing brokerage companies so-called broker pools. It hopes thereby the entrance to the good conditions in the insurance sales. The brokerage firms have often negotiated special contracts with the insurance companies. That would also increase Wefox’s margin.

In addition, the brokers should be able to make more sales through the technology of Wefox, so the hope of the company. In Switzerland and Austria one is already in advanced discussions with broker enterprises, in Germany the discussions would likewise already run.

What does Wefox intend to do with the 110 million euros?

The money should flow into the expansion of Wefox. The Insurtech startup wants to expand into nine European markets. The startup is already active in Germany, Austria and Switzerland, as well as in Italy and Spain. At the beginning of 2020 the start in Japan should succeed. Gründerszene and had already reported on the plans. With the new investor Creditease, Wefox wants to enter the Chinese market. In addition, the distribution platform for other insurance companies and the product of One will be further developed. The One co-founder recently talked about the plans in an interview.

What is company valuation?

Wefox has already been listed as a candidate for a billion-dollar valuation. In the current round of financing founder Julian Teicke does not give any information about the rating. He would not have made an excessive part in the company, he said on demand. It can be assumed that the rating is still below the limit of one billion.

Who is the new lead investor?

Mubadala Investment Company, the sovereign wealth fund of Abu Dhabi, is also one of the investors of Softbank Vision Fund. The money for Wefox comes from Mubadala Ventures, a fund with 400 million US dollars. Abu Dhabi is the most progressive country in the United Arab Emirates, says Wefox founder Julian Teicke. There are still criticisms of human rights activists in Abu Dhabi. The company has obtained references to the new lender, Teicke said.

How much has flowed into the company?

Around 32 million euros have so far flowed in Wefox. Previous investors include Target Global, Salesforce Ventures, Speedinvest and Sound Ventures by Hollywood actor Ashton Kutcher.

According to One insurance they would have counted on a lot more fraud cases. And one year ago One launched his insurance app. The company gained 70,000 customers over time and had to learn how to handle fraud.

Also published on Medium.

Published inStartups

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