Deutsche Bank and UniCredit have contributed an additional $55 million to Wefox, the $4.5 billion German insurance technology company, according to two unnamed sources with knowledge of the transaction that was able to obtain.
The sources, who were not authorized to publicly disclose the information, claimed that the company, which offers insurance plans through an online platform, raised the additional funds in a debt financing deal from the two European lenders.
According to the sources, the agreement is set up as a convertible debt agreement, which means that upon Wefox’s subsequent cash raise, the debt will be converted into equity.
The new funding comes after Wefox raised $55 million internally earlier this year and from JPMorgan and Barclays in a debt round.
Wefox’s $4.5 billion valuation is unaltered because it did not raise equity.
This raises Wefox’s total fundraising for the year to $160 million and is a sign of confidence at a time when the macroeconomic climate for the insurtech sector is bleak.
According to the sources, the money will be utilized to support the eight-year-old Wefox in stepping up its plans for international expansion and intensifying its merger and acquisition activity.
Wefox collaborates with a network of internal and external brokers to distribute its insurance products, in contrast to other insurtech platforms such as Lemonade in the United States and Getsafe in Germany that provide insurance directly to customers without the need for brokers.
Wefox is also pursuing a novel approach to insurance sales known as “affinity” distribution. Here, the business charges subscription fees to other companies for the use of its insurance software. One such customer is an online car dealer who adds auto insurance at the point of sale.
Some of the biggest names in venture capital as well as well-known institutional names from the traditional financial world support Wefox.
Salesforce Ventures, Target Global, Seedcamp, Speedinvest, and Horizon Ventures are among its venture capital backers. Other current investors include UBS, Goldman Sachs, Mubadala Capital Ventures, and Jupiter Asset Management.
Wefox is also making significant investments in artificial intelligence, which has recently gained popularity in the tech industry thanks to the success of ChatGPT, a chatbot that uses AI.
Wefox primarily automates customer service and policy applications using AI. The business has three AI-focused tech hubs located in Paris, Barcelona, and Milan.
