March 4, 2024

micro foxThe German insurtech startup has closed a new funding round from existing investors. The amount of funding won’t impress anyone, as the company managed to secure $55 million. This can be seen as an extension of the $400 million Series D round, as Wefox managed to maintain the same $4.5 billion valuation.

In fact, Wefox is still valued at $4.5 billion, which is interesting news. Many startups are struggling to raise capital or have had to lower their valuations. In addition to this traditional equity investment, Wefox has secured a $55 million revolving credit facility from JP Morgan and Barclays.

As a reminder, Wefox sells insurance products through internal and external insurance brokers.unlike its german rivals get safe, which does not rely on a direct-to-consumer distribution strategy. Since Wefox now has 4,000 distribution partners, the scale of this model is very large.

Recently, Wefox launched its own insurance company – Wefox Insurance. This allows companies to design and sell their own insurance products without relying on third-party insurers.

I caught up with the company’s co-founder and CEO, Julian Teicke (above), to discuss the company’s current strategy. Wefox’s most important source of revenue remains its distribution business. “On the distribution side, we’re already profitable,” Teicke said.

“We work with about 300 insurers. It’s all the big insurers in P&C (property and casualty), life and health. Then, we have our own insurers. Most of the revenue comes from our distribution business. If you Looking at the total premiums on the platform, it’s about 2 billion euros. Last year’s 200 million euros was our own insurance, the rest was third-party insurance,” he added.

Speaking of the credit facility, Julian Teicke told me it can be used for acquisitions etc. Wefox currently operates in six European markets (Germany, Switzerland, Austria, Italy, Poland and the Netherlands). It plans to expand into new markets – such as France, Spain or the UK – by acquiring, integrating and developing promising insurance distribution businesses.

refocus on distribution

“Eighteen months ago, we saw the world was changing. Then we made a number of decisions around financial discipline, and those decisions are now paying off. We doubled our revenue and margins in the first quarter,” Teicke said. He compared the first quarter of 2023 to the first quarter of 2022.

That’s why Wefox’s first-party insurance business was deprioritized compared to its distribution business. “We were primarily focused on growing (Wefox Insurance’s) revenue — we stopped,” Teicke said. The company is now focusing on markets it really understands. On the distribution side, the company is currently developing a network of Affinity Partners so they can embed insurance products into their offerings.

“When you buy a car, you get an all-important car insurance. When you buy an e-bike, you get an e-bike insurance. It’s very similar to our brokerage business. It lowers our customer acquisition cost,” Teicke said.

Continued investment in Wefox Insurance will still be useful for the company’s next product. Next year, the company plans to release its technology stack so other insurers can create insurance products, manage performance in real time and process claims using APIs. Essentially, Wefox wants to become the Amazon Web Services of the insurance industry with this platform.

I asked Julian Teicke if Wefox became an insurance company with this end goal in mind. “It wasn’t a plan at all. When we started, we had no clue. We just took it day by day, step by step. Insurance is a very difficult industry, and it’s slow. It’s been so slow to really make a difference at scale. . When you look at insurance companies, they already own 99 percent of the business — 1 percent is what they basically have to fight for,” he said.

“There’s no sense of urgency to change. That’s why it’s not easy to build a new disruptive player in the insurance industry. I feel like we have to understand how distribution works, how insurance works. Every insurance company needs to go digital. Will There is a digital infrastructure company for insurance companies,” he added.

In short, Wefox is streamlining its existing activities to become profitable in all areas (distribution and insurance) as quickly as possible. At the same time, it is exploring this new platform business, which it hopes will become the most important business over time.