Insurtech Wefox raises $55 million in new funds
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Wefox, an insurtech firm located in Berlin, managed to raise another $55 million in funding from Deutsche Bank and Unicredit. The funds come in the form of a convertible debt agreement, according to the company, whose current valuation was estimated at $4.5 billion.
Once Wefox raises cash in the future, the debt will be converted into equity, as explained by CNBC. Previously, the company secured a $55 million credit facility from JPMorgan and Barclays, which took place in May of this year. At the same time, it managed to secure an internal $55 million raise.
Wefox had to make tough choices due to the current market state
Wefox is a company that operates across Europe, offering its technology to more than 300 insurers and 4,000 distributors, serving over 2.5 million customers on the continent. Its CEO, Julian Teicke, commented on the details of the funding on LinkedIn, stating that the raise serves as a significant affirmation from the industry.
Teicke took it as a clear nod regarding the path that the company has chosen to travel down on its way to reaching profitable growth. He also added that leading the firm from a period of hypergrowth to one of profitable growth in a fairly short span is a rather complex challenge.
It is what compelled the firm to make some difficult decisions along the way, such as having to step back from several innovative projects that were important to the firm and its CEO. However, he added that the dedication to adapt to the realities of the market was crucial, so tough decisions had to be made.
Given the fact that numerous established firms have seen major job cuts, share price drops, and other issues — with some even having to shut down — for failing to adapt to the market, Wefox’s decision to step back from certain projects seems justified.
Wefox seeks expansion and experiments with a software subscription fee
The firm still continues to make progress, even with these, potentially profitable projects put on hold. The new debt round is considered a big success, and since the firm did not raise equity, its valuation also remains unchanged. Furthermore, the new funding has raised the total amount raised this year by the German company to $160m.
The firm intends to use them to accelerate its global expansion plans, and double down on acquisitions and merges. Wefox is also trying to enter a new model of selling insurance called affinity distribution. This is a model where the firm sells insurance software to other businesses for a subscription fee.
