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The CEO of unicorn startup WeFox says he is focusing on sustainability not SPACs as he looks to grow an insurance giant

The CEO of unicorn startup WeFox says he is focusing on sustainability not SPACs as he looks to grow an insurance giant


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Europe’s insurance market faces major disruption.

In 2020, annual funding for insurance startups reached an all-time high of $7.1 billion across 377 deals — marking a 12% increase in funding and a 20% increase in deals compared to 2019, according to CB Insights.

Wefox was launched in 2015 by CEO and founder Julian Teicke and operates in six countries. The company offers direct-to-consumer insurance products alongside its main platform, which connects brokers to customers and has previously said it wants to become “the Stripe of insurance”.

Wefox offers motor, home, and liability insurance products and will soon offer a service called Wefox Prevent — a risk-prevention product that will use data from smartphones and other connected devices to warn users of impending danger.

The company claims that its focus on profitability will help ensure it stays competitive in the long term.

“In insurance it’s impossible to turn an unprofitable book into a profitable one,” Teicke told Insider. “It’s possible to grow fast but if you focus on growth without focusing on the margins it can cause major problems down the line.”

The business is hoping to hit profitability with expected revenues of $365 million in 2021, Teicke previously told Reuters.

It hopes its platform model may make the path to profitability easier than for direct-to-consumer digital competitors, such as Lemonade.

Lemonade, also founded in 2015, could be classified as Wefox’s closest US comparison. It offers a more direct model, but has made major losses in recent years despite its shares soaring since its public debut last summer. Unlike Lemonade, Wefox uses intermediaries in the form of its brokerage network on its platform to connect customers with brokers and distributors.

“What we’ve nailed is growing faster at a better loss ratio,” Teicke added. “We’re only launching products in areas where we can overperform the market and to do that we have to adapt pricing and underwriting in real time.”

Wefox claims its data-led model has reduced loss ratios — that is the level of premiums earned versus claims paid out — compared to its industry peers. A wave of digital-first insurers has shaken up what was usually seen as a paper-based and traditional industry with simplification the first area of business.

“In motor insurance, for example, customers usually had a 30-question form that would take an hour to complete, we are able to reduce that to five questions making the entire transaction only five to ten minutes and at a discounted rate,” Teicke said. The key has been to onboard brokers and agents from across Germany’s fragmented insurance market and use tech to smooth the process.

Data has been a revolutionary factor in the insurance market, Teicke said. Automation has reduced the cost of administration and the number of people involved in processes.

The company has also made a number of investments designed to improve its product offering by opening a new AI office in Paris, where a team of deep-tech specialists focus on moonshots to improve the business. The aforementioned Wefox Prevent product is one such innovation from the company’s Paris-based team.

Wefox’s latest fundraise talks reportedly stalled

Wefox is currently in the process of raising fresh funding.

Insider previously reported that the business was looking to raise around €200 million ($237 million) in total with commitments already established for approximately €110 million ($130 million) of the round.

That tranche was led by the corporate investing arm of Singapore’s Economic Development Board (EDBI), with participation from existing investors Merian Chrysalis, OMERS Ventures, Mubadala Capital, Target Global, Idinvest, and Salesforce Ventures.

But the fundraising stalled following that part of the raise. The company parted ways with advisors FT Partners, and has since hired Goldman Sachs to resume its fundraising plans, Sifted reported.

Wefox declined to comment on its fundraising efforts.

The startup secured unicorn status through two separate Series B funding rounds totalling $235 million led by Mubadala Ventures and OMERS Ventures respectively, at a valuation of $1.65 billion.

Wefox has also been involved in internal discussions about the prospect of going public.

Teicke noted that “some random and great people have been getting in touch on SPACs.” He refused to be drawn on the company’s future plans beyond that noting that: “Our focus is on the numbers and the business. As long as we focus on the numbers we can raise capital in any way.”

2021 is likely to see Wefox look to double its revenues amid a recent push into new markets, Italy and Poland, despite investing more into its technology and analytics capabilities, Teicke added.

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