As a startup or SME, funding is usually one of the first few issues you face. Especially if there are plans for expansion. So after the first few investors that you’ve went through – friends, family and your first customers, you have to approach venture capitalists (VC) or investors. When you start looking for potential investors, you need to find the ones that care about your industry, product, or idea. On the other hand, VCs are interested in companies of a certain size, and some specialize in early stage or seed funding rounds.
In today’s article we look at how Acko, an Indian insurance startup that managed to get the e-commerce tech giant Amazon, to invest $12M in their company.
Who is Acko
Founded by Coverfox co-founder Varun Dua in 2016, Acko is a licensed non-life insurance company regulated by the IRDAI. Acko leverages on data analytics and customer behaviour analysis to provide innovate products with personalised insurance products through its digital platform. The company offers mobile protection plans, car and bike insurance. They have also partnered with Ola, a ride-hailing company to offer in-ride insurance to riders.
According to their website, their tagline is “Killer Prices. Terribly Convenient. Stress-free claims” – three of the basic things consumers are looking for when buying an insurance. Acko aims to make buying and using insurance effortless by tapping on technology. Since they are a digital company, they spend lesser on running the company without the help of a third-party so they pass this savings to their customers, thus they’re able to sell it at lower prices compared to traditional insurance companies in India. Furthermore, they reduce the paperwork needed when purchasing an insurance as everything is done digitally. They also have an easy process for claims and a support team for customers to call and enquire about their services.
Amazon + Acko
It was Acko’s new category of ‘internet economy’ that greatly appealed to Amazon and got them this deal. The company is currently working with Amazon with e-commerce coverage, focusing on gadget protection. They also have an Amazon offer on their site exclusively for Amazon users if they pay using AmazonPay.
“The idea is to find some way to collaborate in the future,” Varun Dua explained in an interview. “We’re a new age insurance company and [Amazon] believes it can create value. They see that bundling financial service or something in the lending space [may] happen [in the future] given the data and numbers of users they sit on.”. (Source: Tech Crunch)
Amit Agarwal, SVP and Country Manager, Amazon India, said “Acko is a young and nimble start-up bringing technology and data-led innovation to the insurance sector to deliver a better insurance experience for customers. We are excited to back companies that are focused on using technology for enhanced customer experience and are led by missionary founders and management teams. And, we look forward to being a part of their growth journey.”
As one of the first few insurtech field that Amazon has tapped in, Acko has potential to reach Rs 9,000 core opportunity through their innovative and personalised insurance policies while partnering with Amazon. Other media reports said that the deal pegs Acko’s valuation at about $100 million.
“We will use the funds to strengthen our technology teams to deliver data analytics and towards brand building activities,” Acko founder Varun Dua told PTI. (Source: Business Today)
In conclusion
Besides Amazon, Acko also has other investors backing them up. The latest infusion also had ChrysCapital and Catamaran Ventures participating, which raised Acko’s total equity funding to nearly USD$42M – which is one of the largest seed rounds for a startup in India. This includes the $30 million seed money from venture capital firms as well as angel investors. Acko’s other investors include Swiss Re Reinsurance Holding Company Ltd, Transamerica Ventures Fund as well as Venk Krishnan and Subba Rao from NuVentures.
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