Berlin InsureTech wefox raises $400m in Mubadala-led financing round

Company plans to use part of the proceeds to grow its product portfolio and expand in new markets

Cars at a BMW showroom in Berlin. Vehicle insurance is among the services offered by InsureTech company wefox in Europe. Bloomberg

Wefox, a digital insurance company in Berlin, has raised $400 million in a Mubadala Investment Company-led investment round that will help it grow across Europe and new markets in the US and Asia.

The series D growth financing raised the company’s “post-money valuation” to $4.5 billion from the $3bn it reached in June last year, wefox said in a statement on Tuesday.

Eurazeo, LGT, Horizons Ventures, Omers Ventures and Target Global were among investors who participated in the funding, comprising both debt and equity components.

“This new valuation ... is a clear validation of our business model, which focuses on indirect distribution via agents rather than direct,” said Julian Teicke, chief executive and founder of wefox. "This makes our business one of the most credible InsurTechs in the market right now."

The company, which will use part of the proceeds to enhance its product portfolio, generated $320m in revenue last year.

In the first four months of this year, wefox earned more than $200m in revenue, which keeps it on track to achieve a $600m target by the end of 2022, Mr Teicke said.

Digital insurance companies that offer simplified claim processes and improved communication have grown at a brisk pace during the Covid-19 pandemic. Rapidly evolving InsurTech solutions and increasing automation is expected to further drive market growth.

The global market for digital insurance platforms, estimated at about $102bn in 2020, is projected to reach $169bn by 2026, growing at more than 9 per cent annually, a report by consultancy Research and Markets found.

Allied Market Research expects the market to reach close to $300bn in value by the end of this decade, at a compound annual growth rate of more than 11 per cent between 2021 and 2030.

Global investment in the InsurTech sector hit an all-time high of $15.8bn in 2021, reinsurance broker Gallagher Re said in April.

The sector attracted more capital inflows last year than in 2020 and 2019 combined, registering a record 564 InsurTech deals, the report said.

Founded in 2015 by Mr Teicke, Fabian Wesemann and Dario Fazlic, wefox is a full-stack InsurTech that sells insurance through intermediaries rather than directly to customers. Wefox is also the parent company of wefox Insurance, which is its in-house regulated insurance carrier.

The company raised $650m in its series C funding round in June last year. Its $235m financing in 2019 was jointly led by Mubadala and Omers.

“Unlike most direct-to-consumer InsurTechs, wefox acts as an ecosystem enabler – empowering the various distribution channels instead of competing with them,” Ibrahim Ajami, head of Mubadala Ventures, said.

“This model has allowed wefox to scale quickly and sustainably, providing brokers and customers alike a platform that seamlessly digitises the insurance market.”

With an asset base of $248bn, Mubadala invests on behalf of the Abu Dhabi government and is at the heart of the emirate’s plans to diversify its revenue base and generate income from sources other than oil.

In recent years the sovereign fund has pivoted towards investments in health care, life sciences, technology, consumer-focused businesses, renewable energy and the mobility sectors.

Wefox has more than two million customers and aims to expand its client base to three million by the end of this year. Last December, the company appointed former Samsung Electronics president Young Sohn as chairman.

Mr Wesemann, who is also chief finance officer of the wefox, said: “Wefox is in the strongest position ever.

"In successfully closing this funding round, we reinforce our strategy and enable faster acceleration on our path to greater revenue and profit.”