German Startup Wefox raised a $ 650 million Series C funding round led by Target Global. As a result of this funding round, the company reached a post-monetary valuation of $ 3 billion. Wefox is a digital insurer focused on personal insurance products, such as home insurance, auto insurance and personal liability insurance.
“It’s a lot more than what we wanted to collect at the start. It was a very quick process and basically we were oversubscribed by around 4x, ”co-founder and CEO Julian Teicke (pictured left) told me.
In December 2019, the company reported a valuation of $ 1.65 billion. And the company says today’s fundraising cycle is one of the greatest Series C cycles of all time – and possibly the greatest Series C cycle for any insurtech company in particular.
“Almost all of the big existing investors are participating,” Teicke said. OMERS Ventures, G Squared, Mountain Partners, Merian, Horizons Ventures, Eurazeo, Mubadala Capital, Salesforce Ventures, Speedinvest, CE Innovation Capital, GR Capital and Seedcamp are once again participating in this founding round of Wefox. New investors include FinTLV, Ace & Co, LGT and its affiliate impact investing platform Lightrock, Partners Group, EDBI, Jupiter and Decisive.
“Not only did we raise a very large amount, but also in a very fast time. It took us four weeks in total to get all the commitments, ”co-founder and CFO Fabian Wesemann (pictured right) told me.
Wefox believes he can now iterate and generate more and more income as he scales – he just needs capital to get to the next level. “We are tackling this $ 5.2 trillion industry that has been stuck in the pre-Internet age. We figured out how to disrupt it in our core market, ”Teicke said.
But what makes Wefox different from traditional insurance companies? Wefox is not a direct-to-consumer insurance company. Most insurance products are still sold through agents and the startup believes that won’t change anytime soon.
This is why Wefox has 700 agents selling Wefox products exclusively. It also partners with associated brokers – approximately 5,000 can distribute Wefox products.
“While the rest of the industry seems to be saying human agents are dead, we think they’re more relevant than ever,” Teicke said.
In 2020 alone, the company generated $ 140 million in revenue. If you look at Wefox Insurance, the company’s insurer, the company reported a profit for 2020. As for the group, “we’re going to show overall profitability by 2023,” Wesemann said.
This rapid growth rate combined with a clear path to profitability means Wefox has an ambitious track record. As a full insurance company licensed in Lichtenstein, Wefox can license in other European countries. The company currently lives in five markets and is soon working on its expansion in Italy.
In addition to new markets, Wefox plans to sell new insurance products – property and casualty insurance, pet insurance, health insurance, life insurance… If you are thinking about an insurance product, there is a good chance that Wefox already working on it. “This year, we are launching around 20 new insurance products,” Teicke said.
While distribution is managed in a decentralized manner with local agents discussing with local customers, insurance products are managed centrally. The startup prioritizes products based on revenue potential and moves down the list one product at a time.
Finally, Wefox has ambitious plans to reduce administrative costs. The company has invested in automation so that common processes are managed by an algorithm. Currently, 80% of its processes are handled automatically. It’s a never-ending process because you have to adapt your processes when you launch new products.
Wefox is also working on prevention. The company has set up an AI team in Paris to prevent bad things from happening in the first place. As always with insurance companies, it’s about optimizing every layer and every step of the customer journey to create a product that stands out from what already exists.