WifoxGerman insurtech startup has closed a new funding round from existing investors. The company managed to secure $55 million, so no one will be impressed by the amount. You can think of this as an extension of that. $400 million Series D round Wefox managed to maintain the same $4.5 billion valuation.
However, the fact that Wefox is still valued at $4.5 billion is interesting. Many startups are struggling to raise funding or are in need of lower valuations. In addition to this traditional equity investment, Wefox has secured his $55 million in revolving lines of credit from JP Morgan and Barclays.
Wefox sells insurance products through in-house and external insurance brokers.Unlike German rivals get safe, does not rely on direct-to-consumer distribution strategies. Wefox now has 4,000 reseller partners, and this model has scaled very well.
Most recently, Wefox launched its own insurance company, Wefox Insurance. This will allow the company to design and market its own insurance products without relying on third-party insurers.
I met with the company’s co-founder and CEO, Julian Teicke (pictured above), to discuss the company’s current strategy. Wefox’s most important source of revenue remains its distribution business. “On the distribution side, we are already profitable,” Teike said.
“We work with about 300 insurers. [property and casualty], life and health. Then we have our own insurance company. Most of the revenue comes from the distribution business. The total amount of premiums on the platform is around €2 billion. €200m of last year was in our own insurance and the rest in third party insurance,” he added.
As for lines of credit, Julian Teike said they could be used for acquisitions, for example. Wefox currently operates in 6 European markets (Germany, Switzerland, Austria, Italy, Poland and the Netherlands). The company plans to expand into new markets such as France, Spain and the UK by acquiring, consolidating and developing promising insurance distribution businesses.
Refocus on delivery
“18 months ago we realized the world was changing. We doubled our sales and doubled our profits,” said Teicke. He’s comparing his Q1 2023 to his Q1 2022.
As such, Wefox’s self-insurance business has been given a lower priority than its distribution business. “We focused primarily on increasing sales [of Wefox Insurance] — and we stopped it,” Teike said. The company is now focused on markets it knows well. On the sales side, the company is currently developing Affinity’s network of partners to integrate insurance products into their offerings.
“When you buy a car, you get vehicle insurance on top of that. When you buy an e-bike, you get e-bike insurance on top of that. It reduces customer acquisition costs,” Teike said.
Our continued investment in Wefox Insurance will continue to benefit the company’s next offerings. Next year, the company plans to release a technology stack that will enable other insurers to use the API to create insurance products, manage performance in real time, and process claims. Essentially, Wefox wants to become the Amazon Web Services of insurance with its efforts on this platform.
I asked Julian Tayke if Wefox became an insurance company with this end goal in mind. “It wasn’t a plan at all. We had no clue when we started. We just took it one step at a time every day. Insurance is a very difficult industry and it moves very slowly. “It takes a long time to really make a big change. If you look at the insurers, they already have 99% of the business and they basically have to fight for the 1%,” he said. said.
“There is no rush to change. That is why creating new disruptive players in the insurance industry is not easy. I felt that we need to understand that all insurers need to go digital.There will be a digital infrastructure company for insurers,” he added.
In short, Wefox is trying to streamline its existing activities and reach profitability in all areas (distribution and insurance) as quickly as possible. At the same time, we are exploring this new platform business with the expectation that it will become the most important business in the future.
