British firm Marshmallow is elevating $ 85 million at a valuation of $ 1.25 billion for its bigger, huge knowledge model of auto insurance – TechCrunch

Marshmallow – a UK auto insurance company that has made a name for itself in the market by offering a new approach to auto insurance that aims to use a wider range of data points and clever algorithms to attract a more diverse group of customers and offer more competitive pricing – today announces a milestone in his life as a startup and in the wider UK tech world.

The London-based company – which was co-founded by identical twins Oliver and Alexander Kent-Braham and David Goaté – has raised $ 85 million in a new financing round. The Series B rating is important in two ways: it catapults Marshmallow to a "unicorn" rating of over $ 1 billion – more precisely, $ 1.25 billion; and Marshmallow itself is one of a very small group of British startups founded by blacks – Oliver and Alexander – to try to hit that number.

(To be clear, Marshmallow describes itself as "the first British unicorn to be founded by individuals who are black or have black roots," though I can imagine at least one thing that preceded it: WorldRemit, the last month Renamed Zepz, and is currently valued at $ 5 billion; co-founder and chairman Ismail Ahmed has been described as the most influential black Briton.)

Regardless of whether Marshmallow is the first or one of the first, given the lack of diversity in the UK tech industry, especially in the upper echelons, it is a notable detail that is worth pointing out, although I hope that one day this will be less rare.

Meanwhile, Marshmallow's novel big data approach and the successful traction in the market speak for themselves. When we discussed the company's final round of funding – a $ 30 million increase in November 2020 – the startup was valued at $ 310 million. Now, less than a year later, Marshmallow's rating has nearly quadrupled, surpassing 100,000 policies sold in its home country and growing 100% in the past six months.

The plan, Oliver told me in an interview, is now to deepen relationships with customers, partly through more engagement to make them better drivers, but also potentially to sell more services to them.

This will enable the startup to take a new approach that other Insurtech startups are taking in rethinking traditional insurance models, much like YuLife is positioning its life insurance products in a larger wellness and personal improvement business. Right now, the average age of Marshmallow's customers is 20 to 40, Oliver said – and there is consideration of potentially new products aimed at even younger users. That means there is long-term value in improving loyalty and retaining these customers for many years to come.

Additionally, Marshmallow will use the funding to move closer to its plan to expand into markets outside the UK – a strategy that has been in the works for some time. Marshmallow talked about expanding internationally on its last round but has yet to announce which markets it will tackle first.

Insurance – and insurance startups in particular – are often thought of together with fintech startups, not least because the two industries have a lot in common: Both are active in the areas of assessing and mitigating risk and fraud; In many cases it is a matter of discretionary investments by customers; and they are both highly regulated and require watertight privacy for their users.

Perhaps because so much hard work is the same for both, it is not uncommon for services to be developed for both sectors (FintechOS and Shift Technology are two examples), for fintech companies to deal with insurance services, and so on.

But the reality is that insurance – and auto insurance in particular – has massive COVID-19 impacts that are unique to this industry. Separate reports from EY and the Association of British Insurers pointed out that 2020 was indeed a boom for many auto insurance companies: lockdowns meant fewer people were driving and therefore fewer involved in accidents and fewer claims.

In 2021, however, things will look different: the introduction of new pricing rules will likely result in a number of providers slipping into the red for the year. And the Chartered Insurance Institute points out that it will also be worth watching how low car usage in a year will affect future usage: some car owners, especially in urban areas where it's expensive to keep a car , will inevitably begin to wonder if they even need to own a car and have it insured.

All of this, ironically, actually plays into the hands of a company like Marshmallow, which offers a more flexible approach to customers who might otherwise be turned down or no longer offered by more traditional companies. Interestingly, while neobanks have spurred more traditional institutions to update their products to be competitive, that hasn't really happened in the insurance industry – at least not yet.

“We started with the idea of ​​the power of data and the use of a wider range of resources (than the incumbents). This meant that we could offer better prices to more people, ”said Oliver. It didn't cause Marshmallow to see increased competition from older established companies. “They are big companies and they are stuck in their ways. These companies have been around for decades, some for centuries. Change doesn't happen quickly. "

That gives companies like Marshmallow and other newer players like Lemonade, Hippo and Jerry (not an insurance startup per se, but also active in the field) a great opportunity and a great opportunity for investors to support new ideas in an industry that is valued valued at $ 5 trillion.

"The pull the team has achieved shows the demand for a new breed of insurance provider that is more focused on the consumer experience and leverages the latest technology and data to deliver fair prices," said Eileen Burbidge, partner at Passion Capital , in a opinion. "We pride ourselves on supporting the team's ambitions from the start and now look forward to the next chapter in Europe as it continues its mission to change the industry for the better."

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