Zopper raises $75 million to solve India's insurance problem

For more than half a decade, Zopper has built a platform for SMBs, helping merchants with invoicing and payments through its point of sale platform. It sold that IP to PhonePe in mid-2018, but instead of joining the fintech giant, Zopper is working on a new venture from scratch and independent of PhonePe. That business, an API platform for insurance infrastructure, said Tuesday it had raised $75 million in new funding.

The New Delhi-based startup’s Series C funding was led by Creaegis. ICICI Venture and Bessemer Venture Partners as well as existing backer Blume Ventures also participated in the funding, the startup said. Zopper, an 11-year-old startup, has raised $96 million to date. He did not disclose the valuation at which he closed the round.

Zopper works with insurance providers and creates custom, byte-sized products that it then delivers to distribution partners. This approach sets Zopper apart from many of its competitors in India, which bundle coatings from various manufacturers and try to cut out distributors and reach consumers directly.

“If you look at insurance penetration in India today, it’s only 3 to 4 percent,” Surjendu Kuila, founder and CEO of Zopper, said in an interview. “If you’re trying to get new people into insurance, you just can’t sell them plans that cost more than $37 to $50 a year.”

Offering customers parts of insurance coverage in smaller packages has also not proven successful because there is no margin for anyone to make money, he said.

Zopper is trying to solve this by partnering with banks, non-bank financial institutions, retail chains, mobility companies that already have a customer base. “These partners need an insurance platform and that’s what we provide,” he said.

Kuila claims that no other firm uses this approach and therefore has not been able to reduce its customer acquisition costs. “This is why even Policybazaar [online insurance aggregator that became a public company last year] it’s not profitable,” he said. Zopper, by contrast, has been profitable for more than 18 months, he said.

“Our thesis from the early days was clear: the infrastructure is already there. Someone has poured capital into building this infrastructure. So why then don’t we use technology to streamline that instead of creating everything from scratch,” he said.

Zopper’s current portfolio of insurance coverage (Image credit: Zopper)

Zopper currently has a presence in over 1,200 Indian cities and has partnered with over 150 industry players, including retail group Amazon, startup Ola, retail chain Croma, phone maker Xiaomi, Japanese conglomerate Hitachi and Equitas Small Finance Bank.

“We truly believe in Zopper’s vision to transform and automate the insurance distribution model in India. Over the years, they have demonstrated the value of technology and product innovation to their ecosystem partners and insurers,” Prakash Parthasarathy, managing partner at Creaegis, said in a statement.

“All this was achieved in a very capital efficient manner and our investment will help the accomplished management team led by Surjendu and Mayank to scale and improve access to a wider customer base.” We are privileged to be their partner and are committed to supporting their journey given our expertise in this space.”

The startup plans to deploy the fresh funds to significantly increase its workforce and also explore opportunities to acquire smaller startups, Kuila said. He is in no rush to go public. He said Zopper initially aims to first reach close to $1 billion in revenue and will file for an initial public offering within about five years.

The startup’s sale of its previous business to PhonePe was wrongly reported by many as an acquisition by some news organizations. Quila said PhonePe never had a stake in Zopper and the startup, which counts Tiger Global among its backers, continues to be supported by its early backers and new investors.

“Given ICICI Venture’s successful investment track record in the insurance sector, we believe Zopper is well positioned to capture this long-term growth opportunity,” said Gagandeep S Chinna, director of private equity at ICICI Venture, a firm that started to invest in local businesses more than 30 years ago. “We are excited to support the management team’s vision to establish Zopper as a leading player in Insurtech with its scalable technology, multi-insurer engagement and distribution channel partnerships across sectors.”

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