Indian digital insurance provider Acko has raised $255 million as a part of its Series D round led by private equity firms General Atlantic and Multiples Private Equity, at a valuation of $1.1 billion to enter the coveted unicorn club.
Canada Pension Plan Investment Board and Lightspeed Growth took part in the round along with existing investors Intact Ventures and Munich Re Ventures. The transaction is subject to approval by Insurance Regulatory and Development Authority of India (IRDAI).
The round makes Acko the 34th start-up to enter India’s growing list of unicorns (start-ups valued at $1 billion or more), and the second insurtech start-up to do so in 2021. Acko’s rival Digit Insurance entered the coveted club in January, and doubled its valuation to $3.5 billion in subsequent funding rounds by July.
With the current infusion, the total funds raised by Acko stands at roughly $450 million.
The five-year-old insurtech start-up plans to use the funds to grow its auto insurance vertical as well as micro-insurance products across travel, gadgets and appliances, which together contribute close to 80% of the firm’s total premiums. It will also be investing to grow its year-old health insurance vertical which contributes to almost 20% of the overall platform premiums.
The company will look to raise another round of funding in the coming months for expansion into new verticals, Acko founder and chief executive officer Varun Dua confirmed to Mint in an interaction.
Five-year Acko manufactures and sells digital-first insurance products across car, bike, travel, gadgets and health insurance. It partners with companies including Amazon, MakeMyTrip, Ola, Urban Company to distribute its products.
The company also provides corporate insurance to 500,000 employees across 150 corporations, at present. With the fundraise, the company plans to scale this growth to 1.5 million employees across 200 corporations in the next six months.
“Almost $100-150 million of our fundraise will go into scaling our recently launched health insurance offerings. We want to ensure that Acko becomes the protection destination for users looking to buy insurance products. While we had the option from investors to raise an even larger round (at a higher valuation), we believe the present valuation is in pace with our current business,” Dua told Mint.
Dua added that the company may look to acquire 1-2 businesses over the next year, as it looks to bolster its product service integrations with more primary care providers and across garages and workshops for the auto insurance vertical. Till date, over 70 million users have bought insurance from Acko, he added.
Acko’s auto insurance vertical has close to 2 million insurance buyers. It looks to double this number over the next three years.
The company looks to clock premiums worth $160 million (or Rs 1200 crore) by the end of 2021. This is more than double from the $60 million (or Rs 450 crore) of gross premiums it clocked in 2020.
Currently, Acko also provides insurance products to gig workers on platforms including Swiggy, Zomato and Urban Company. It currently covers more than 200,000 gig workers through its offering.
Other investors in Acko include Amazon India, Accel, Elevation, Ascent Capital, Intact Ventures, Munich Re Ventures and Flipkart’s co-founder Binny Bansal, among others.
