JPMorgan and Barclays back a $110M investment in German InsurTech startup Wefox at $4.5 billion valuation

Wefox, a Berlin, Germany-based insure tech startup, has closed $110 million in a new round of funding from existing investors including JPMorgan and Barclays.

In an announcement on Wednesday, Wefox said that $55 million of the total amount raised came in the form of a revolving credit facility from JPMorgan and Barclays. The remaining $55 million was secured through an equity investment led by investment management firm Squarepoint Capital. The company said it maintained its $4.5 billion valuation from its July funding round.

“It’s a new type of financing for a growth company,” Wefox’s CEO and co-founder Julian Teicke said in an interview. “Risk investors, equity investors, they understand, they want to take risk.” “Banks typically don’t, so for them it was really important to understand our path towards profitability and the maturity of our business,” Teicke added.

The news comes at a time when thousands of startups are still struggling to raise new funding due to high-interest rates and the global economic outlook.

Founded in 2015 by a team of entrepreneurs led by CEO Julian Teicke Teodoro Martino, Fabian Wesemann, and Dario Fazlic, Wefox specializes in personal insurance products, including home insurance, motor insurance, and personal liability insurance.

Unlike traditional insurance providers, Wefox does not directly underwrite claims. Instead, the company operates as an intermediary, connecting its users with brokers and partner insurance firms through its online platform. This approach allows customers to access a wide range of insurance options and providers conveniently through Wefox’s digital marketplace.

Wefox’s competitors include U.S. digital insurer Lemonade, German firm GetSafe, as well as established insurance incumbents like Allianz. Before founding Wefox, CEO Teicke worked as an investment manager at Kreditech.

“We have around 300 insurance companies that we work with. It’s all of the big insurance companies in P&C [property and casualty], life and health. Then, we have our own insurer. The majority of the revenue comes from our distribution business. If you look at the total volume of the insurance premiums on the platform, it’s around €2 billion. €200 million of that last year was our own insurance and the rest was third-party insurance,” Teicke said.

Despite the challenges that the broader tech industry has been facing, Wefox remains confident in its resilience. According to Teicke, the CEO of Wefox, the company considers itself “crisis-resistant.” In the first quarter of 2023, Wefox experienced significant growth in revenue, nearly doubling its figures compared to the previous year. As a result, the company has set its sights on achieving profitability by the end of this year.

In contrast to many other companies, Wefox has not felt the need to resort to staff layoffs. Teicke said that Wefox has been able to navigate the market conditions without facing the same pressures to downsize its workforce. Instead, the company has shifted its priorities, he said, “doubling down on things that work and stopping things that don’t make sense.”