Indian insurance platform InsuranceDekho has raised $150 million in a Series A funding round as the more-decade-old company sees M&A opportunities at a time when the market slump has engulfed most startups in the South Asian country.
Goldman Sachs Asset Management and TVS Capital jointly led the Series A funding round of the 13-year-old startup, they said. The round includes some debt — about $40 million — but executives said more than half of the raise was against equity.
The Series A funding values the Gurugram-headquartered startup, which was incubated within the unicorn group’s auto market group CarDekho, at between $475 million and $500 million, according to a person familiar with the matter. In an interview with australiabusinessblog.com, InsuranceDekho executives declined to comment on the startup’s valuation, saying they were in the “soonicorn” club. Investcorp, Avatar Ventures and LeapFrog Investments also participated in the round.
InsuranceDekho works with most insurance companies in the country and has direct integration with nearly four dozen firms offering nearly 400 insurance products. Auto coverage is currently the most popular insurance product the startup sells, it said, as it prepares to expand into health and life categories and serve small and medium-sized businesses.
India’s current insurance penetration remains below 5% of GDP, compared to 12% in the US. According to the World Bank, an average Indian earns about $2,100 a year. The rating agency ICRA estimated that of those Indians who purchased an insurance product, they spent less than $50 on it in 2017.
Ankit Agrawal, co-founder and CEO of InsuranceDekho, said the startup has a presence in about 98% of all zip codes in the country, giving it an opportunity to go deeper as the market matures. While InsuranceDekho is not a household name in urban Indian cities, Agrawal said the startup sells more than 80% of all coverage in smaller Indian cities. By the end of FY23, InsuranceDekho aims to pay out total premiums worth more than $240 million, he said.
“We need to go beyond the urban regions when it comes to insurance penetration in the country. To achieve our goal of democratizing insurance for the general public, we are expanding our reach and will continue to build on our technology-enabled solutions and authorized advisors to reach every village and region of India by the end of the year. operate. said Agrawal.
InsuranceDekho currently relies on more than 80,000 gig-economy workers called “agents” to educate the market and sell insurance coverage. Agrawal defended that greater India is not ready to download an app and purchase an insurance product at the moment. They need to be aware of its benefits and someone to ask questions to, he said. The startup plans to more than double its workforce of agents, who are not its employees, by the end of the year.
Dozens of companies, including Digit, which wants to go public, listed company PolicyBazaar and Amazon-backed Acko, which is in advanced stages of deliberations to launch a round, as well as Paytm and PhonePe are selling insurance products in India . The arrival of fintech giants in the category, Agrawal argued, is indicative of market size and opportunity.
The key to increasing insurance product adoption in India is access to the middle and lower middle income bracket, Praveen Sridharan, a partner at TVS Capital, said in a statement.
“InsuranceDekho, with its desktop model and digital DNA, provides a powerful mechanism to expand this penetration. We are convinced of the InsuranceDekho model. Of course, we always support founders who can demonstrate they have brought alpha and who have been impressed by Ankit and the team based on their execution ability, operational excellence and superior technology skills. We are excited to partner in their journey to enable access to insurance products for India’s 600,000 villages,” he added.
InsuranceDekho also plans to use the new funds to acquire smaller companies that can increase their capabilities or give it a greater geographic advantage, said InsuranceDekho’s Agrawal.
The startup’s funding comes at a time when many other companies in the country are struggling to raise new funding as investors become cautious about market conditions.