UK’s Marshmallow raises $85M on a $1.25B valuation for its more

Marshmallow – A UK-based car insurance provider that has made a name for itself in the market by providing a new approach to car insurance, which aims to use a comprehensive set of data points and clever algorithms to net a more diverse set of customers and provide more have to use. Competitive rates – The UK is declaring a milestone in its life today in the big tech world of startups as well.

The London company — co-founded by identical twins Oliver and Alexander Kent-Brahms and David Goethe — has raised $85 million in a new round of funding. The Series B valuation is significant on two counts: it pushes Marshmallow to a “unicorn” valuation above $1 billion — specifically, $1.25 billion; And Marshmallow itself became one of a very small group of UK startups founded by Black people – Oliver and Alexander – to reach that figure.

(To be clear, Marshmallow describes itself as “the first UK unicorn to be founded by individuals of Black or Black heritage,” though I can think of at least one: WorldRemit, which released last month Zepz was rebranded, 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 a first or a first, given the lack of diversity in the UK technology industry, especially in its upper ranks, it is a remarkable detail that is worth pointing out, even as I hope a The day it will be less rare.

Meanwhile, Marshmallow’s novel, big-data approach and successful traction in the market speak for themselves. When we previously covered the company’s most recent funding round — a $30 million increase in November 2020 — the startup was valued at $310 million. Now less than a year later, Marshmallow’s valuation has nearly quadrupled, and has surpassed 100,000 policies sold in its home country, growing 100% over the past six months.

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

In it, the startup will tap into a new approach that other insurtech startups are rethinking of the traditional insurance model, just as uLife is placing its life insurance products within a larger wellness and personal improvement business. Currently, the average age of Marshmallow’s customers is 20 to 40, Oliver said — and there are even ideas for potential new products for younger users. This means there is long-term value in improving loyalty and retaining those customers for many years to come.

Simultaneously, Marshmallow will use the funds to draw closer to its plan to expand into markets outside the UK – a strategy that has been in the works for some time. Marshmallow was in its final stages of international expansion, but has yet to announce which markets it will try to 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: they both work in the areas of assessing and mitigating risk and fraud. Huh; They are in many cases discretionary investments on the part of clients; They are both highly regulated and require undeniable data protection for their users.

Perhaps because the two have so much in common, it is not uncommon to see services built to serve both sectors (FintechOS and Shift Technology are two examples), for fintech companies to dabble in insurance services, and so on. .

But in reality, insurance – and car insurance in particular – has seen a massive impact from COVID-19 unique to that industry. Separate reports from EY and the Association of British Insurers said that 2020 actually saw a lift for many car insurance companies: the lockdown meant fewer people were driving, and therefore fewer accidents And making fewer claims.

2021, however, has been a different story: New pricing rules being implemented will likely see many providers in the red for the year. And the Chartered Insurance Institute points out that it would also be worth looking at how a low use of cars in a year will affect usage going forward: Some car owners, especially in urban areas where it is expensive to own a car, inevitably begin to question. Will they need to own and insure a car?

All of this, ironically, really plays into the hand of a company like Marshmallow, which is offering a more flexible approach to customers who might otherwise be rejected by more traditional companies, or taken out of their offerings. could. Interestingly, while Neobank has certainly prompted more traditional institutions to try to update their products to compete, the same hasn’t really happened in insurance — at least not yet.

“We started with the idea of ​​harnessing the power of data and a wide range of resources [than incumbents], and using that in our pricing has enabled us to offer better rates to more people,” Oliver said, but that hasn’t allowed Marshmallow to see sharp competition from older incumbents. Way stuck. These companies have been around for decades, some centuries. Change is not happening soon.”

This leaves a huge opportunity for companies like Marshmallow and other newcomers like Lemonade, Hippo and Jerry’s, and a huge opportunity for investors to support new ideas in an industry estimated at $5 trillion.

Eileen Burbidge, Partner at Passion Capital, said, “The traction the team has gained reflects the demand for a new type of insurance provider, one that focuses more on the consumer experience and the latest technology and technology to deliver reasonable prices. uses the data.” Statement. “We are proud to have supported the team’s ambitions since its inception, and now look forward to its next chapter in Europe as it continues its mission to transform the industry for the better.”

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