London-based insurtech firm Zego hopes to use the large financial boost to expand into the new mobility market as well as several European countries.
Zego founders Sten Saar (right), Stuart Kelly (middle) and Harry Franks (left) (Credit: Zego)
Insurtech firm Zego has announced it intends to expand across Europe after receiving $42m (£33.5m) in a series B investment round.
It will use the financial boost to launch operations across several European countries, adding to its customer base in the UK, Ireland and Spain.
It claims this has contributed to the firm growing by 900% over the past 12 months.
Originally founded to provide a new approach to insurance for the gig economy by covering workers and their vehicles through a per-usage premium – the firm has since moved into the transport insurance market for fleet and delivery drivers.
CEO Sten Saar said: “When we built Zego from scratch three years ago, our mission was to transform the insurance sector by creating products which truly reflected the rapidly changing world of transport.
“We’ve already come a long way since then, and the latest funding round paves the way for an exciting new chapter as we expand through Europe.
“The world is becoming more urbanised and because of this, we are moving from traditional ownership of vehicles to shared user-ship.
“This means that the rigid model of insurance that has existed for hundreds of years is no longer fit for purpose. We are extremely proud to be at the forefront of change.”
The new investment, led by German venture capital firm Target Global, brings the total funding for Zego to $51.7m (£40.7m), up from $9.7m (£7.7m) raised in previous rounds.
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Among the investors involved in Zego’s latest funding round was Taavet Hinrikus, founder of peer-to-peer currency transfer company TransferWise, which was last valued at $4bn (£3.1bn) by Goldman Sachs.
Mr Hinrikus said he was inspired to invest after seeing the speedy growth of Zego, which launched its first policy in August 2016.
“I’ve been following Zego for some time and have been hugely impressed by the team and its ability to rapidly roll out innovative new insurance products and quickly gain market share,” he added.
“This investment will be a springboard for further growth that will see it continue to shake up the insurance sector.”
Majority investor Target Global took the opportunity to invest based on Zego’s plan to serve the new mobility market, the sector which its Mobility 2.0 Fund was created for.
Ben Kaminski, Target Global partner and head of the fund, said: “With the growth of new mobility services, Zego identified a major gap in the insurance market and created a unique business model to fill it, which the incumbents will find very difficult to replicate.
The potential of this company is almost limitless, and I fully expect to see its UK success mirrored across Europe and beyond in the coming years.”
Zego’s European operations and plans to expand
Zego recently entered the commercial ride-hailing market through its first partnership with WeFlex, a rental company providing cars to drivers using platforms like Uber.
Since then, it has become active in the UK, Spain and Ireland, providing telematics-driven usage-based insurance to commercial fleet owners and delivery drivers – which is one of its largest customer bases.
Zego claimed it insures a third of the UK’s food delivery market, largely through partnerships with Deliveroo, Just Eat and Uber Eats, offering a range of policies, from minute-by-minute insurance to annual cover.
With the new funding, it now aims to enter the new mobility services market, providing cover for ride hailing, ride sharing, car rental and scooter sharing.
The firm has said that to accommodate for the expanded customer base, it will need to double its workforce from 75 to 150 – including the recruitment of engineers, data scientists, and specialists in operations and pricing.