Global ecommerce behemoth Amazon has led a $12 Mn funding round in online-only insurance startup Acko. Ashish Dhawan, the founder of private equity firm ChrysCap, also participated in the round along with Catamaran Ventures, the personal investment arm of Infosys co-founder NR Narayana Murthy.
Varun Dua, CEO, Acko said,“We are thrilled to have Amazon and Ashish Dhawan as our investors. This investment is a validation of Acko’s strategy to innovate ever more for tomorrow’s financial needs of users.”
Dua had told ET that the startup will be beefing up its technology. It’s heavily tech-intensive, both, operationally and technology-wise, to set up claims across the country. The other thing Acko will do is scale up its marketing efforts and the business overall.
The fresh capital is expected to help the company for about two years as it stands on the verge of coming to the market at the end of 2019 or in early 2020. With this round, the total capital raised by Acko has reached $42 Mn.
Commenting on the investment, Amit Agarwal, senior vice-president and country manager at Amazon India, said in a statement, “Acko is a young and nimble startup 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 focussed on using technology for enhanced customer experience and are led by missionary founders and management teams.”
Inc42 had reported in January that Amazon was in the final stages of closing an investment in Acko.
The Mumbai-based fintech startup Acko General Insurance, which was founded by Coverfox co-founder Varun Dua in 2017, had secured $30 Mn in a Seed round in May 2017.
The investors included Catamaran Ventures; Venk Krishnan and Subba Rao of NuVentures; Kris Gopalakrishnan; Hemendra Kothari of DSP Blackrock; Atul Nishar, founder and chairman of Hexaware Technologies; Rajeev Gupta, veteran investment banker and founder of Arpwood Capital, Accel Partners, and SAIF Partners.
The company recently received its in-principle regulatory clearance to launch a general insurance business in India. It has received its R3 license in September 2017.
Amazon Investing In Indian Startups
Amazon has been betting on the potential of Indian startups. Recently, Agarwal talked about startups and said, “All the startups that are running… people should be very proud of what they’ve achieved.”
In December 2014, Amazon made its first investment in India by investing $10 Mn in Bengaluru-based gift card technology and retail startup QwikCilver Solutions. Then it acquired Noida-based payment gateway firm EMVANTAGE Payments Pvt Ltd, for an undisclosed amount in February 2016.
Amazon was also one of the investors in Chennai-based financial marketplace BankBazaar, which raised nearly $110 Mn. During a recent interview to Livemint, Agarwal said, “BankBazaar is the kind of investment that hopefully can converge in the future.”
In November 2017, Amazon announced a collaboration with global crowdfunding platform Kickstarter and China-headquartered hardware accelerator HAX to aid the acceleration process of startups in India, thereby propelling the Indian Startup Ecosystem.
In April 2018, SAIF Partners and Sequoia India-backed online lending platform Capital Float raised $22 Mn in a follow-on Series C funding round from Amazon Inc.
Online Insurance Market In India
Overall, according to Inc42 DataLabs Indian Startup Funding report 2017, the Indian fintech industry has received $3.01 Bn across 111 deals in 2017.
The sector continued to lead its growth. According to Indian Tech Startup Funding Q1 2018 report, fintech as a sector witnessed the highest funding.
The insurance space in India is currently dominated by banks and government agencies such as LIC, GIC, etc. Also, there are a plethora of insurtech startups such as PolicyBazaar, CoverFox, among others.
However, currently, only 3% insurance is bought online in India in a $80 Bn market. This share is likely to grow given the rising access of consumers to online insurance services.
With Amazon investing in insurtech startups like Acko, we can definitely expect the merging of synergies in the coming years as the global ecommerce behemoth expands its portfolio and services in India.