The Wefox founders were again able to collect money from investors.
(Photo: wefox)
Frankfurt Digital insurance company Wefox raises another $400 million from investors. Following the round of funding, led by Abu Dhabi-based sovereign wealth fund Mubadala Investment Company, the valuation has risen to $4.5 billion.
Just over a year ago, Wefox received $650 million from Target Global, among others, and was valued at $3 billion. Eurazeo, LGT, Horizons Ventures and Omers Ventures have also invested in the insurtech as part of the new financing round.
With the fresh money, which according to company boss Julian Teicke consists of a “significant” equity share and also debt capital, Wefox wants to further develop the platform and grow even faster internationally. “The launch in the Netherlands is imminent. Other markets such as France and Spain are next on the list,” said Teicke in an interview with the Handelsblatt. So far, Wefox has been active in Germany, Austria, Poland, Italy and Switzerland.
Teicke had already told the Handelsblatt in April of this year that they wanted to raise more money on the private capital market. Since then there had been speculation that the rating could double or even be higher.
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In view of the uncertainties surrounding the Ukraine war, high inflation and rising interest rates, which have been putting tech companies under pressure worldwide for months, an increase in the valuation by 50 percent is also remarkable.
Numerous other start-ups are currently only conducting rounds of financing with the same or even falling ratings. An extreme example is the Swedish payment service provider Klarna, where the valuation recently collapsed by 85 percent.
In any case, they were not just concerned with “maximum increase in the rating, but also with the overall package,” explains company boss Teicke. Mubadala is already involved in Wefox. “Now, however, another team from Mubadala has joined, which can optimally support us in our growth ambitions,” says the Wefox co-founder.
Investor interest in insurtechs in German-speaking countries
According to Frederik Winter, partner and expert for supervisory law at Linklaters, investors “still show a high level of interest in investing in insurtechs in German-speaking countries”. For one thing, valuations in the insurance sector have often not risen as much as in other fintech sectors. On the other hand, the insurance industry is still lagging behind in terms of digitization.
However, Winter’s colleague Thomas Broichhausen, partner and insurance expert at Linklaters, adds that in the current market environment, investors are “also taking a closer look at German insurtechs”. In particular, the question of whether companies manage to calculate premiums and potential damage appropriately is becoming more of a focus.
Teicke is convinced that the Wefox business model shows its advantages, especially in times of crisis. Because in contrast to other insurance start-ups, which often rely on direct sales via the Internet, Wefox sells its policies through consultants, brokers and other partners. In addition to the insurance of the in-house Wefox Insurance, they also offer products from other insurers.
According to CFO Fabian Wesemann, around 80 percent of the sales of the Wefox Group, which amounted to more than 300 million euros in 2021, consist of commissions. Premium income only accounts for the significantly smaller part. This year, Wefox plans to double sales to around 600 million euros.
While numerous fintechs, including Trade Republic and Nuri, are laying off employees, Wefox wants to continue to create jobs. The Berlin company with Swiss roots currently has more than 1300 employees. The number of customers is expected to increase from the current two million to more than three million by the end of the year.
More: IPO a long way off: Wefox is aiming for another round of financing on the private capital market