InsuranceDekho raises $150m despite market crash

Indian insurance platform InsuranceDekho has raised $150m in a Series A funding round as the decade-plus firm considers merger and acquisition opportunities at a time when the The market crash has engulfed most of the South Asian nation’s startups.

Goldman Sachs Asset Management and TVS Capital co-led the 13-year startup’s Series A funding round, they said. The round includes debt – around $40 million – but its executives said more than half of the increase was against equity.

The Series A funding values ​​the Gurugram-based startup, which was incubated within unicorn group car market group CarDekho, at between $475 million and $500 million, according to a person familiar with the matter. In an interview with TechCrunch, InsuranceDekho executives declined to comment on the startup’s valuation, but said they were part of the “soonicorn” club. Investcorp, Avataar Ventures and LeapFrog Investments also participated in the round.

InsuranceDekho works with most insurers in the country and is directly integrated with nearly four dozen companies through which it offers nearly 400 insurance products. Auto coverage is currently the most popular insurance product sold by the startup, he said, as it prepares to expand into health and life categories as well as small and medium enterprises.

Current insurance penetration in India remains below 5% of GDP, compared to 12% in the United States. An average Indian earns around $2,100 a year, according to the World Bank. Rating agency ICRA estimated that among Indians who purchased an insurance product, they spent less than $50 on it in 2017.

Ankit Agrawal, co-founder and managing director of InsuranceDekho, said the startup has a presence in around 98% of all postcodes in the country, giving it the opportunity to go deeper as the market matures. Even though InsuranceDekho is not a household name in urban Indian cities, Agrawal said the startup sells over 80% of all its coverage in small Indian towns. By the end of FY23, InsuranceDekho aims to pay out total premiums worth more than $240 million, he said.

“We need to move beyond urban areas when it comes to insurance penetration in the country. To realize our goal of democratizing insurance for the mainstream, we are expanding our reach and will continue to leverage our technology solutions and empowered advisors so that they can serve every village and region of India by the end of the year,” says Agrawal.

InsuranceDekho currently relies on more than 80,000 gig-economy workers, known as “agents”, to educate the market and sell insurance coverage. Agrawal defended that greater India is currently not ready to download an app and purchase an insurance product. They need to be aware of its benefits and someone they can ask questions of, he said. The startup also plans to more than double the number of agents, who are not its employees, by the end of the year.

Dozens of companies including Digit, which is seeking to go public, the publicly traded firm PolicyBazaar, and Amazon-backed Acko, which is in advanced stages of deliberations to raise 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 the size and opportunity of the market.

The key to increasing adoption of insurance products in India is access to the middle and lower middle income classes, Praveen Sridharan, partner at TVS Capital, said in a statement.

“InsuranceDekho, with its agency model and digital DNA, offers a powerful mechanism for this penetration to grow. We believe in the InsuranceDekho model. Of course, we always support founders who can demonstrate that they bring alpha and have been impressed with Ankit and the team based on their ability to execute, operational excellence, and superior technology skills. We are thrilled to partner with their journey to enable access to insurance to India’s 600,000 villages,” he added.

InsuranceDekho also plans to deploy the new funds to acquire smaller businesses that could increase its capabilities or give it a broader geographic advantage, InsuranceDekho’s Agrawal said.

The startup’s funding comes at a time when many other companies in the country are struggling to get new funding in place as investors are wary of market conditions.