Frankfurt, St Gallen The “all-hands” meeting with his employees is still having an effect on Julian Teicke. A high double-digit number of employees at the Berlin insurance start-up Wefox have Ukrainian or Russian roots. Anyone who wanted to was allowed to tell the online staff meeting how the war was affecting their families. “Hundreds of employees cried,” says the founder. It was bad.
But at some point someone had to say: “And now to the financials.” The start-up is like many companies at the moment: the business has to continue, the look has to go ahead.
Despite the war in Ukraine and the poorer economic prospects, Wefox wants to keep going. So far, business has not been affected by the weaker economic environment, emphasized Wefox boss Teicke in an interview with the Handelsblatt. Therefore, you can still feel a great deal of interest from investors: “We are currently being offered significantly higher valuations than last year.”
Last spring there was a real hype about German fintechs. In June, Wefox raised $650 million in a funding round led by venture capitalist Target Global and was valued at $3 billion. At this point, Teicke and CFO Fabian Wesemann let it be known that Wefox had achieved its financial independence and that no further money would have to be raised on the private capital market until a possible IPO.
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Since then, the market environment has changed completely. After the stock markets had been climbing new records for a long time, the war in Europe led to great uncertainty and high fluctuations.
For German financial start-ups and thus also for Wefox, an IPO is a long way off. Many investors have also become more cautious in recent weeks and rounds of financing have become more difficult.
Chances for a new round of financing are good
But companies with a functioning business model apparently continue to get money. Teicke adapts to these circumstances: “If the price is right, we would raise money again in a private round of financing.” He does not want to say what the right price would be for him.
Some industry experts believe that the rating could be doubled. That would currently be a strong value after tech stocks have recently weakened and the Ukraine crisis has unsettled investors.
In the past year, “unicorns”, as start-ups with valuations in the billions like to call themselves, have regularly made such leaps: The banking software provider Mambu, for example, was able to increase its valuation by a factor of 2.6 between January and December. The Viennese tutoring start-up Gostudent managed to double its rating within six months. The HR software provider Personio even increased its rating by a factor of 3.7 between January and October 2021.
Such developments are likely to be the exception in the near future. However, Wefox has a good chance of being part of it. According to information from the Handelsblatt, there are offers. If the conditions are right, a new round of financing could be announced in the coming weeks or a few months.
Teicke himself sees the ongoing investor interest primarily as confirmation that we have chosen the right strategy with Wefox.
Significant increase in sales planned
In contrast to other insurance start-ups, which often rely on direct sales via the Internet, Wefox sells its policies primarily through consultants. In Europe, the company works with 5000 brokers. 700 have exclusively committed to Wefox. For some time now, the company has also been selling insurance through partners such as car dealers and electronics chains.
According to Teicke, the Wefox Group achieved sales of 310 million euros last year, significantly more than originally planned. The start of 2022 was also successful. “This year we want to double sales again – to around 700 million euros,” says the Wefox boss.
In the operational business, the Wefox Group is profitable, but not because of high investments. Wefox wants to grow above all abroad. “This year and next, we are concentrating on further market entries in Europe,” says Teicke. The most intensive discussions are currently being held with partners in the Netherlands.
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So far, the majority of sales have come from commission income. Its own insurer, Wefox Insurance, had a premium volume of 40 million euros in 2021. Its share of total sales is likely to increase in the future. According to the company’s plans, by 2030 half of the turnover of over 100 billion euros will be attributable to its own premium volume.
New sources of revenue should contribute 20 percent to total sales: Wefox has been working on a core system since 2018 to be able to build insurance products for different sales channels in real time. According to Teicke, the first other insurers are being given access to Wefox sales via this platform. The aim is for insurers to be able to integrate their entire sales force onto the Wefox platform from 2025.
A prevention product developed by a team in Paris will also play an important role in the future. Customers who buy the product are warned of risks and in return have to pay less insurance premiums. According to Teicke, the company is on schedule to launch the product in the second half of the year. In order to further strengthen the team, acquisitions in the tech sector are also conceivable.
More: Will the fintech bubble burst? The war in the Ukraine and shaky stock markets are affecting the valuations of financial start-ups