frankfurt Digital insurer Element is seeking new funding from investors, according to the financial world. Berlin Insurtech hopes to raise up to 100 million euros in a new funding round in the near future. Several sources familiar with the matter told Handelsblatt. But the exact amount has yet to be determined and ultimately depends on the interests of investors.
A spokesman for Element declined to comment on the information. People are always looking at financing options and keeping options open, she said.
Just last summer, Element announced a €21.4 million funding round led by the pension fund of the Berlin Dental Association (VZB). The insurtech company has raised a total of $99 million to date, according to Pitchbook, which the data provider puts at a valuation of $155 million.
As an insurance company with a Bafin license, Element operates in a highly regulated business sector. Therefore, companies must support growth with appropriate capital.
Deals will be complicated by difficult market conditions, financial sources said. With new investors apparently making tougher demands and smaller funds looking to exit, it’s impossible to draw any immediate conclusions about whether the insurtech can maintain last year’s ratings. Element did not provide any information on the exact value at the time.
Finding investors has been complicated by the loss of Element’s chief financial officer and head of insurance Eric Schuh a few days ago. The former Swiss Re manager left Insurtech at the end of May. A spokeswoman for the company has confirmed the relevant information to Handelsblatt. They parted ways by mutual agreement as Schuh wanted to take on a new position in the insurance industry.
Thinksurance formal financing
Element isn’t the only insurance startup looking for funding right now. On Wednesday, Frankfurt-based platform operator Thinksurance disclosed its new funding round. The commercial insurance specialist has secured €22 million from insurtech specialists Viewpoint Ventures, M-Tech Capital, venture capital fund Segenia Capital and existing investors, among others. The rating has even improved since its last funding round in 2019, Thinksurance said. The insurtech company hopes to use the money to further improve its platform and services for insurance brokers.
Despite the negative headlines, digital insurer Wefox has already made a name for itself expanding its funding round starting in 2022. The startup raised $55 million in equity and $55 million in debt.
This appears to be a temporary lull after company boss Julian Teicke had to admit at the start of the year that his ambitious growth plans over the past few years could not materialize as quickly as hoped and that the company must focus on profitability instead.
The question remains, however, what technological innovations the startup can actually come up with that would still justify a future $4.5 billion valuation.
Insurtech firms raise high expectations among investors
Other insurance start-ups, so-called insurtechs that have raised high expectations among investors in the past, have had to ask themselves this question as well. According to Dietmar Kottmann of management consultancy Oliver Wyman, some of these companies have developed good business models: “However, it is clear that these companies are more similar to established insurance companies or sales organizations, improved by technological innovations, but still Nothing fundamentally changed.”
Some current owners may have to consider discounting future funding rounds as investors have valued these insurtech companies at much higher valuations than traditional insurance in the past.
But it’s also clear that for some digital insurers, the last funding round has been 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, and high inflation and sharply rising interest rates have completely changed the market environment. Since then, investors have been restless and even more selective about which companies to invest in and which not to invest in.
Insurance manager Clark, for example, last received fresh capital in November 2021, when Allianz X was involved in the Frankfurt-based insurtech’s takeover of Finanz Group. Meanwhile, Clark made further acquisitions and took over UB Partner in Switzerland and Anorak in the UK.
The last round of financing for Getsafe, a Heidelberg digital insurance company, was also some time ago. In October 2021, the startup received 55 million euros in funding, which, among other things, invested in an insurance license. Company founder Christian Wiens said recently that he hopes to close the next round of financing this year or next.
Here too, there is a greater focus on profitable business, although the Getsafe boss plans to grow further. The start-up has also exited the highly competitive motor insurance market and is no longer doing any new business there.
Hans Eder of consultancy Capco emphasizes: “For insurtechs, the economic reality check is a close second, as economic facts and actuarial results are suddenly more important than pure growth ideas.”
Acquisition of established suppliers is possible, experts say
Industry watchers believe insurance startups will raise more rounds after known ones this year. At the same time, some founders are said to be more open to acquisitions by larger players such as insurance companies, distributors or private equity firms — also because the IPO is so far away.
But choices should also be made. French insurtech company Luko, which took over Berlin-based digital insurer Coya last year, has applied for the Protection Shield program, according to media reports. According to this, Luko must repay the debt of 45 million euros, and in April, he could no longer pay the 12 million euros to the start-up company Unkle, which was also taken over. No new investors have been found. Luko’s request to Handelsblatt has so far gone unanswered.
More: Insurtech Element takes over commercial insurer Mailo’s portfolio