For over half a decade, Zoper has built a platform for small and medium businesses, helping merchants with their invoicing and sales platform. In mid-2018, it sold that IP to PhonePe, but instead of joining the fintech giant, Zoper is creating a new venture from scratch and independent of PhonePe. That business, an API platform for insurance infrastructure, said Tuesday it raised $75 million in new funding.
The New Delhi-headquartered startup’s Series C funding was led by Creagis. ICICI Venture and Bessemer Venture Partners as well as existing backer Bloom Ventures participated in the funding, the startup said. 11-year-old startup Zopper has raised $96 million so far. He did not disclose the estimate on which he closed the round.
Zopper works with insurance providers and creates bite-sized, personalized products that it then delivers to distribution partners. This approach differentiates Zoper from many of its competitors in India, which aggregate coverage from various manufacturers and try to cut out distributors and reach consumers directly.
“If you look at the insurance penetration in India today, it’s only 3 to 4%,” Zoper founder and CEO Surjandu Kuila said in an interview. “If you’re trying to bring new people into the insurance industry, you can’t sell plans that cost more than $37 to $50 a year.”
Offering insurance covers to customers in small bags has also not been successful because there is no margin for anyone to make money.
Zoper is trying to solve this by partnering with banks, non-bank financial institutions, retail chains, mobility companies. “These partners need an insurance platform, and that’s what we provide,” he said.
Kuila says that no other company has taken this approach and thus has been able to reduce their customer acquisition costs. “That’s why even Policy Bazaar [online insurance aggregator that became a public company last year] It is not profitable,” he said. Zoper, by contrast, has been profitable for more than 18 months, he said.
“From the early days, our thesis was clear: the infrastructure is already there. Someone spent capital to build that infrastructure. So why not use technology to streamline that instead of creating everything from scratch,” he said.
Zoper is currently available in over 1,200 Indian cities and has partnered with over 150 players in the industry, including Amazon Retail Group, ride-hailing startup Ola, retail chain Croma, phone maker Xiaomi, Japanese conglomerate Hitachi and Equitas Small Finance Bank.
We truly believe in Zoper’s vision to transform and automate the insurance distribution model in India. Over the years, they have demonstrated their value in technology and product innovation to their ecosystem partners and insurers,” Prakash Parthasarathy, managing partner at Creagis, said in a statement.
“All this has been achieved in a capital efficient way and our investment will help the talented management team led by Sargendu and Mayank to gain a wider customer base and improve their reach. We are privileged to be their partner and committed to support their journey based on our experience in this space.”
The startup plans to use the new funds to significantly grow its workforce and also explore opportunities to acquire smaller startups, Kuyla said. He is in no rush to appear in public. Zopper initially plans to raise about $1 billion in revenue and have an initial public offering within five years, he said.
The startup’s sale of its previous business to PhonePe has been misreported by many in some news organizations. Kuila said PhonePe had no stake in Zoper and the startup, which counts Tiger Global among its backers, continues to be backed by its previous backers and new investors.
“Given ICICI Ventures’ track record of successful investments in the insurance sector, we think Zoper is well-positioned to capture this long-term growth opportunity,” said Gagandeep S Chinna, Director, Private Equity, ICICI Ventures, which has started investing in domestic companies. 30 years ago. “We are delighted to support the management team’s vision to establish Zoper as a leading insurtech player with its impressive technology, multiple insurance tie-ups and distribution channels across sectors.