Frankfurt According to financial circles, the digital insurer Element is looking for fresh money from investors. The Berlin Insurtech wants to collect up to 100 million euros in a new round of financing in the near future. Several people familiar with the matter told the Handelsblatt. However, the exact amount has not yet been determined and ultimately depends on the interests of investors.
A spokeswoman for Element declined to comment on the information. One is always looking for financing options and keeps options open, she said.
Just last summer, Element announced a financing round of 21.4 million euros, which was led by the pension fund of the Berlin Dental Association (VZB). According to Pitchbook, the insurtech has raised a total of $99 million so far, with the data provider citing a valuation of $155 million.
As an insurer with a Bafin license, Element operates in a highly regulated business area. The company must therefore underpin the growth with appropriate capital.
According to financial circles, the transaction will be complex due to the difficult market environment. Since the new investors are apparently making stricter requirements and smaller funds want to exit, it is not possible to draw any direct conclusions as to whether the insurtech can maintain the rating from last year. Element had not provided any information on specific values at the time.
The search for investors is complicated by the fact that Element lost its chief financial officer and head of insurance operations, Eric Schuh, just days ago. The former Swiss Re manager left the Insurtech at the end of May. The company spokeswoman had confirmed the relevant Handelsblatt information. They parted ways by mutual agreement, as Schuh wanted to take on a new position in the insurance industry.
Thinksurance makes financing round official
Element isn’t the only insurance startup looking for money right now. On Wednesday, the Frankfurt platform operator Thinksurance made its new round of financing public. The commercial insurance specialist received EUR 22 million from, among others, the insurtech specialists Viewpoint Ventures, M-Tech Capital, the venture capital fund Segenia Capital and existing investors. The rating has even increased since the last round of financing in 2019, Thinksurance said. The insurtech wants to use the money to further improve the platform and the offers for insurance brokers.
Despite negative headlines, the digital insurance company Wefox had previously made a name for itself with an expansion of its financing round from 2022. The start-up raised $55 million in equity and $55 million in debt.
This seems to have calmed down for the time being after company boss Julian Teicke had to admit around the turn of the year that his ambitious growth plans from the past few years cannot be realized as quickly as hoped and that the company has to focus on profitability instead.
The question remains, however, which technological innovations the start-up can actually come up with that can still justify the valuation of 4.5 billion dollars in the future.
Insurtechs have raised high expectations among investors
Other insurance start-ups, which as so-called insurtechs have aroused high expectations among investors in the past, also have to ask themselves this question. Some of these companies have developed good business models, says Dietmar Kottmann from the management consultancy Oliver Wyman: “However, it is apparent that these are more similar to the established insurers or sales organizations and have been improved evolutionarily through technological innovations, but have not been fundamentally changed.”
Since investors would have given these insurtechs much higher valuations in the past than would be the case with classic insurance, some of the current owners would probably have to reckon with discounts in future financing rounds.
However, it is also clear that for some digital insurance companies the last round of financing was a long time ago and there is a certain pressure to find new financiers. The last time some start-ups raised money was before the Ukraine war, high inflation and sharp rises in interest rates completely changed the market environment. Investors have been unsettled since then and are even more selective about which companies to invest in and which not.
The insurance manager Clark, for example, last received fresh capital in November 2021, when Allianz X got involved as part of the takeover of the Finanz Group by the Frankfurt-based insurtech. Clark has meanwhile made further acquisitions and taken over UB Partner in Switzerland and Anorak in Great Britain.
The last round of financing at the Heidelberg digital insurer Getsafe was also some time ago. In October 2021, the start-up received 55 million euros, which it put into the insurance license, among other things. Company founder Christian Wiens recently stated that he wants to complete the next round of financing this year or next.
Although the Getsafe boss is planning further growth, there is also a stronger focus on profitable business here. The start-up has meanwhile withdrawn from the highly competitive motor vehicle insurance market and is no longer doing any new business here.
“For insurtechs, the economic reality check now follows, since economic facts and actuarial results suddenly count more than pure growth ideas,” emphasizes Hans Eder from the consulting firm Capco.
Experts believe takeovers by established providers are possible
Industry observers are convinced that insurance start-ups will be followed by further financing rounds this year after those already known. At the same time, it is said that some founders would be more open to a takeover by a larger player, such as an insurer, a distributor or a private equity company – also because an IPO is a long way off.
But a selection should also take place. According to media reports, the French insurtech Luko, which took over the Berlin digital insurer Coya last year, applied for a protective shield procedure a few days ago. According to this, Luko has to settle debts of 45 million euros and in April was no longer able to make a payment of 12 million euros to the start-up Unkle, which was also taken over. New investors have not yet been found. Luko has so far left a Handelsblatt request unanswered.
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