Bucking Grim Fintech Trend, German digital insurance provider WeFox raises $ 400 million for expansion to US and Asia
WeFox CEO Julian Teicke
Berlin-based digital insurance provider WeFox secured a $ 4.5 billion valuation after completing a $ 400 million financing round on Tuesday. Although lower than the $ 5 to $ 6 billion valuation insurtech had reportedly sought, it is still up 50% from WeFox’s previous valuation and stands in stark contrast to declining values in much of fintech. Listed fintech shares are down 45% so far this year, with competing insurtech Lemonade down 52%. Some fintechs, such as buy-now-pay-later leader Affirm Holdings, have fallen nearly 90% from 2021 highs.
WeFox currently operates in five, soon to be six, European countries and plans to use the new capital injection to expand to the United States and Asia. “We are at a critical size, we have proven the unit economy and we believe we can roll this out on a global scale,” WeFox CEO Julian Teicke said in an interview with Forbes. “We could do with extra capital because we have a well-oiled machine, we know exactly where to invest.”
Teicke says WeFox has excelled among startups because operations are already profitable, thanks in part to a diversified revenue model. The WeFox platform connects clients with human brokers who sell policies from external suppliers and then take a cut in the broker’s commission.
It also provides a handful of its own insurances, including car insurance, private liability and contents insurance. The direct written insurances accounted for 25% of the company’s revenue of $ 350 million last year. The advantage of mixing direct and indirect insurance approaches is that WeFox gets the first look at, and the ability to serve, the customers with the lowest risk. Those who are not offered WeFox policies are referred to suppliers with higher risk tolerance.
“We can really make sure that in our own book we only pick cherries, which means that we only get the most profitable customers on the lines where we think we can reduce the loss rates and operate more profitably in the market,” says Teicke.
The $ 400 million Series D round consisted of both equity and debt financing. In addition to strengthening its expansion into new markets, WeFox plans to use the money from this round to continue to develop its proprietary technology that enables insurance vendors to build products quickly, distribute these products via APIs to brokers, and adjust insurance offerings in real time.
WeFox has now raised $ 1.3 billion over five rounds of funding. In June 2021, the company raised $ 650 million for a valuation of $ 3 billion in a round led by Target Global. WeFox’s latest Series D round was led by Abu Dhabi’s sovereign wealth fund Mubadala with participation from Eurazeo, LGT
