With its current cash injection, the insurance startup Wefox is bucking the global trend towards the devaluation of young companies. Although the latest round of financing is smaller than previous ones, founder Teicke still describes the company as "well financed".
The German-Swiss insurance startup Wefox is now valued at $4.5 billion by its investors. In the most recent round of financing, Wefox collected a further 400 million dollars in equity and debt capital, as the Berlin-based company announced. "We are well financed and actually didn't need any money," said CEO and co-founder Julian Teicke. "But we have received many inquiries from investors. Now we see an opportunity to use the crisis and grow more aggressively than planned." The round of funding was led by Abu Dhabi's sovereign wealth fund, Mubadala, which already had a stake in the insurtech. Alongside this, Eurazeo and existing investors LGT, Horizons Ventures and Omers gave money.
The company value of the young company founded in 2015 has increased by half within one year. However, the financial injection is smaller than in the previous round: At that time, Wefox had received 650 million dollars in fresh money, above all from venture capitalist Target Global, which should therefore continue to be the largest shareholder.
With the cash injection, Wefox is resisting the global trend towards the devaluation of young companies from the financial sector, which the Swedish payment service Klarna recently experienced. The company, which is best known in Germany for its “Sofort Transfer”, had received fresh money at a valuation of just $6.7 billion. A year ago it was 46 billion.
Wefox wants to use the fresh money to continue investing in technology for the insurance industry, but above all, with the Netherlands, it wants to tackle the next country after Germany, Austria, Poland, Switzerland and Italy. Then it's Spain and France's turn, and later also the USA, where Lemonade and Root are already bustling with several insurance start-ups on the stock exchange.
However, Teicke sees Wefox primarily as a technological sales platform, and around 85 percent of the revenue today comes from commissions from insurers. "By 2030 we want to be the technological backbone of the digital insurance world," he said. "The own-account insurance business will never be the most important part of Wefox. We only occupy special niches with it, but they are very profitable." In 2021, Wefox more than doubled sales to $320 million, and this year it is expected to be $650 million.
With the cash injection, Wefox could also get out of the red faster, said co-founder and CFO Fabian Wesemann. "We are on a clear path to profitability for the entire company. We will do that in 2024, maybe even in 2023." However, co-founder Teicke emphasized that an IPO is currently out of the question given the current environment.
