General Atlantic is in talks to invest about $50 million in Aco, two sources familiar with the matter told TechCrunch, doubling its bets on the Indian insurtech at a time when most investors are treading carefully on investment opportunities.
A New York-headquartered growth equity investor is moving to lead a new financing round of nearly $100 million in an Indian startup, the sources said, speaking on condition of anonymity because the details are private. The new round – which will be funded entirely by existing backers – is likely to go ahead at a flat price of $1.1 billion, one of the sources said.
The investment hasn’t closed, so the terms of the deal could still change, the sources cautioned. Ako became a unicorn last year after receiving funding led by General Atlantic, and the investment firm declined to comment on Wednesday.
The new talks were held earlier this year with PayU to raise more than $200 million at a valuation of $1.8 billion, one of the sources said. It is not clear why the talks failed. Indian newspaper Economic Times reported last month that PayU has submitted a timetable to Aco.
Aco – which counts Lightspeed Venture Partners India, CPPIB, Amazon and Multiples Private Equity among its existing backers – is among the few startups trying to take on the country’s age-old insurance industry with a digital-first product. It develops and sells bite-sized auto insurance products (targeted at drivers and other transportation-related conditions), health coverage for employers, and coverage for gadgets.
The startup has distribution partners with several firms, including Amazon, an existing investor in Acco, as well as travel and hotel booking platform MakeMyTrip, ride-hailing Ola, insurance giant Bajaj Finance and City.
According to Aco last year, it has partnered with companies such as food delivery giants Swiggy and Zomato, which covers about one million gig workers in the country.
It is crucial for companies in India to offer a large catalog of insurance policies. Currently, only a fraction of the country’s 1.3 billion people have insurance and most cannot afford a large policy. According to rating agency ICRA, insurance products accounted for less than 3 percent of the total population in 2017. An Indian earns an average of $2,100 a year, according to the World Bank. ICRA estimates that Indians who bought an insurance product were spending less than $50 in 2017.
The new funding talks come at a time when liquidity activity in South Asian markets has intensified as investors look to write new checks and review their underwriting models for publicly listed companies.
Indian startups raised $3 billion in the quarter ended in September, down 57% from the previous quarter and 80% year-over-year, according to market intelligence platform Tracxn.
