This buzzy London insurtech that wants to 'change the fundamentals of insurance' just raised $4.7 million from top VCs
- Laka, a London-based insurtech, has just raised $4.7 million in new funds from VC investors LocalGlobe and Creandum.
- The startup wants to "change the fundamentals of the insurance market," according to its CEO Tobias Taupitz and will use the funding to fuel its hiring plans and European expansion.
- Laka utilizes a community-led model which it claims leads to a lower cost and better service for its customers.
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UK-based insurtech startup Laka has raised $4.7 million from top European VCs LocalGlobe and Creandum.
Based in London with an office in Bristol, UK, Laka offers insurance products for cyclists based on a community-led model. Founded in 2018, the startup wants to "change the mindset" of customers by flipping the traditional insurance model.
"Insurance has probably been using the wrong business model for centuries," Laka's cofounder and CEO Tobias Taupitz told Business Insider in an interview. "People in our community care about their bike and we're changing people's mindsets about how insurance can be done."
In effect, Laka leverages its community of 5000 cyclists to pay monthly fees for the service which is determined based on whether someone has made a claim rather than a standardized cost at the start of a month. The company claims that this process puts the company first and leads to it being 25% cheaper on average than its competition.
Other specialist cycling insurers in the UK include Yellow Jersey, Bikmo, PedalSure, and CyclePlan alongside policies from larger organisations like Aviva and Evans Cycles.
Investors seem to agree. LocalGlobe co-led the fundraising with European fund Creandum which will assist Laka in its plans to expand on the continent, starting with The Netherlands in the first half of the year. Other investors in the round include Yes VC, and angel investors Nick Evans, chairman of upmarket cycling gear firm Rapha and Oren Peleg formerly the CEO of Fitness First. The new raise brings Laka to a total of $6.4 million.
"These funds have a great track record and they support our vision to go beyond the UK," Taupitz added. "Our aim is to change the fundamentals of the insurance market by serving passionate people."
Laka was founded by Tobias Taupitz, Jens Hartwig and Ben Allen, with the former having previously worked in investment banking at Barclays doing M&A in fintech and insurance. Taupitz says his passion for cycling and a desire to make a fundamental change in insurance was behind the decision to leave the "golden cage" of banking.
"The beauty of Laka is it returns insurance to its pure, mutual heritage," said Remus Brett, partner at LocalGlobe. "Laka's members and their shared interests incentivize positive behaviour which in turn benefits the entire community. These principles are over 300 years old, the difference being technology and increasing consumer awareness that traditional insurance models, with complex clauses, excesses and a painful claims process are fundamentally broken. "
Laka's next steps alongside a fresh hiring push is to further develop its product range so it can work more deeply with customers by finding ways of providing for them in the event of a cycling accident which damages them physically, alongside their bike.