Wefox achieves $4.5 billion valuation through new funding, focusing on profitability as a primary objective.
The German startup Wefox has successfully completed a new round of funding from existing investors
The German startup Wefox has successfully completed a new round of funding from existing investors. The company was successful in securing $55 million in funding, which isn't going to impress anyone. Wefox was able to maintain its $4.5 billion valuation, so this could be viewed as an extension of the $400 million Series D round.
However, an interesting fact is that Wefox is still valued at $4.5 billion. Many startups have to lower their valuations or struggle to raise funding rounds. Wefox also received $55 million from JP Morgan and Barclays in the form of a revolving credit facility in addition to this conventional equity investment.
As a reminder, both internal and external insurance brokers are used by Wefox to sell insurance products. It doesn't use a direct-to-consumer distribution strategy like its German rival Getsafe. This model has scaled very well as Wefox presently has 4,000 conveyance accomplices.
Wefox recently established Wefox Insurance, its very own insurance provider. Without relying on third-party insurance companies, the company can design and sell its own insurance products in this manner.
I talked about the company's current strategy with co-founder and CEO Julian Teicke (pictured above). The distribution business remains Wefox's primary revenue stream. On the circulation side, we're as of now beneficial," Teicke said.
We collaborate with approximately 300 insurance companies. It includes all of the major insurance providers in health, life, and property and casualty (P&C) insurance. Then we have our own insurance company. Our distribution business accounts for the majority of our revenue. The platform's insurance premiums have a total value of approximately €2 billion. The remainder was third-party insurance, with our own insurance accounting for €200 million of that last year.
With regards to the credit office, Julian Teicke let me know that it very well may be utilized for acquisitions, for example. Six markets in Europe—Germany, Switzerland, Austria, Italy, Poland, and the Netherlands—are currently served by Wefox. It intends to grow to new business sectors — like France, Spain or the U.K. — by obtaining a promising protection dissemination business, incorporating it and creating it.
Refocusing on distribution "Eighteen months ago, we observed that the world was undergoing change. We then took a ton of choices around monetary discipline that have now paid off. Teicke stated, "In the first quarter, we were able to double our revenue and double our margins." He is contrasting Q1 2022 with Q1 2023.
When compared to the distribution business, Wefox's first-party insurance business has received lower priority. Teicke stated, "We were primarily focused on growing the top line of Wefox Insurance, and we stopped that." The company now focuses on highly specialized markets. In order to incorporate insurance products into their offerings, the company is currently building a network of affinity partners on the distribution side.
"When you purchase a car, you also get car insurance. At the point when you purchase an e-bicycle, you get an e-bicycle protection on top. That is extremely comparable to our brokerage company. It lowers our costs of acquiring new customers, "Teicke stated.
The on-going interest in Wefox Protection is as yet going to be valuable for the organization's next item. The company intends to make its technology stack available next year so that other insurance companies can use APIs to create insurance products, manage performance in real time, and handle claims. With this platform play, Wefox basically wants to become insurance's Amazon Web Services.
I inquired of Julian Teicke as to whether Wefox intended to become an insurance company. It was not at all the plan. We were clueless when we started. We just went through it step by step, day by day. The insurance industry is so difficult and slow-moving. It takes so long to make a big difference. When you look at insurance companies, "they basically have to fight for 1% of the business they already have," he stated.
There is no pressing need for change. It is therefore challenging to establish a new insurance disruptor. Additionally, I believed that we must comprehend insurance and distribution processes. Each back up plan should become advanced. Insurance companies will have their own digital infrastructure company, he added.
To put it succinctly, Wefox is streamlining its existing operations in order to achieve profitability as soon as possible in all segments (insurance and distribution). At the same time, it is looking into this new platform business, hoping that it will eventually become the most important one.