Insurance policy provider Acko is the latest Indian startup to become a unicorn, joining nearly three dozen other firms in the world's second-largest internet market that have attainted the coveted status this year.
The Bangalore-headquartered startup said it has raised $255 million in a new financing round, bringing its all-time raise to $450 million. The new financing round, which is subject to approval from the country's insurance regulator, was led by General Atlantic and Multiples Private Equity.
CPPIB, Canada's largest pension fund and Lightspeed Growth as well as existing investors Intact Ventures and Munich Re Ventures also participated in the round, which values the five-year-old startup at $1.1 billion, up from $500 million a year ago.
Acko is attempting to take on the country’s antiquated insurance industry with a digital-first product. It develops and sells bite-sized auto insurance products (aimed at drivers and others in transportation-related scenarios), healthcare protections to employers, as well as protection on gadgets.
The startup has distribution partners with a number of firms including Amazon, which is an existing investor in Acko, as well as travel and hotel booking platform MakeMyTrip, ride-hailing firm Ola, insurance giant Bajaj Finance and Urban Company.
Acko covers nearly a million gig workers in the country through partnerships with companies including food delivery giants Swiggy and Zomato. Overall, Acko has amassed over 70 million customers and is clocking a run rate of $175 million in premiums.
Offering a large catalog of bite-sized insurance policies is crucial for firms in India. Only a fraction of the nation’s 1.3 billion people currently have access to insurance and most can’t afford sizable policies.
According to rating agency ICRA, insurance products had reached less than 3% of the population as of 2017. An average Indian makes about $2,100 a year, according to the World Bank. ICRA estimated that of those Indians who had purchased an insurance product, they were spending less than $50 on it in 2017.
“ACKO has meaningfully redefined the protection category for consumers and plans to continue innovating in the space. We strongly believe in supporting our customers in protecting their valued assets or the health and safety of their loved ones via a differentiated product and value-added service," said Acko founder and chief executive Varun Dua.
"Insurance and protection must work for people based on their unique risks and needs in a seamless, reliable fashion. We are thrilled to partner with trusted investors who have a deep understanding of the regulatory environment and bring firsthand experience in working with innovative, high-growth companies.”
The startup said it plans to deploy the fresh capital to broaden its healthcare offerings and hire more talent across technology, product and data science roles.
“We also continue to deepen our health strategy and intend to invest over $150 million in the health business in the near future. We believe health insurance products, claims innovation and a deeply connected ecosystem of health services that improve health outcomes for customers are today’s most urgent needs.”
The funding comes at a time when scores of Indian startups are raising record amounts of capital at an unprecedented pace in India. This week itself, cross-border payments startup Zolve, agritech firm DeHaat, fintech Groww, and edtech Teachmint unveiled their new funding rounds. TechCrunch reported earlier this week that Tiger Global and Falcon Edge Capital are in advanced stages of talks to mint another unicorn in India (DealShare).
Policybazaar, which competes with Acko, will open its initial public offering next week. The startup is looking to raise over $800 million in the IPO.