Miami — Crabi, a Mexican auto insurance company has closed on a $4 million Seed round led by Kaszek Capital. Tuesday Capital, the San Francisco VC that also invested in the likes of Uber and Airbnb, and Redwood Ventures, which focuses its investments on LatAm companies, also participated in the round.
There are more than 50 million cars in Mexico and only 30% of them are insured -- compared to 50% across LatAm, the company said.
Unlike other startups in the space, Crabi is licensed by the CNSF (Comisión Nacional de Seguros y Fianzas), which therefore allows them to both market insurance and underwrite it, meaning they can own the full process of getting insured.
“Crabi is the first startup in Mexico to obtain the license to be a risk-carrier and fullstack auto insurance company,” said Javier Orozco, Crabi’s founder and CEO.
Up until now, Crabi was marketing insurance, but the actual fulfillment was being executed by a third party. Users can visit Crabi on the web or download their app and sign-up for insurance in 5 minutes, the company said. With its new license and $4 million in the bank, Crabi plans to own the whole process and further develop its operations.
“We plan to own the relationship with the regulators and the users. The corporates own the relationship with the regulators, but they don’t own the users. Startups like Guros and others own the users, but don’t have relationships with the regulators,” said Orozco. Guros is an online auto-insurance marketplace in Mexico that raised $5.8 million earlier this year.
In practice, Crabi’s plan of attack means it can design the policy and also back it, allowing the company to make the process of getting insured more seamless, customizable and fast. The company currently has 13,000 users, 60 employees, and a YoY growth rate of 110% (2021 so far).
“There’s a high margin for innovation in the Mexican auto insurance market and Crabi is the only startup to offer a full-stack insurance product that’s both owned and operated entirely by the company. We are proud to lead this round and are excited to support Crabi’s disruption of this prime market with honest, fair and personalized car insurance,” said Nicolas Berman of Kaszek Ventures.
The company was founded in 2017 in Guadalajara and is now operational nationwide. It spent about two and a half years obtaining the CNSF license. To sustain itself until now, the company received $1.4 million in angel money and another $3 million from Orozco himself.
The back story
Orozco is a 5 time serial entrepreneur with two successful exits, giving him a cushy runway to launch Crabi.
“For the early stage of Crabi, I needed to put my money first because we needed to prove our concept and make sure everything works,” Orozco said. Few investors would be OK with a two and a half year launch period if their money was in it.
Before founding Crabi, Orozco started and sold a company called Weisser Technologies that made spare parts for the television industry, and another company called International Gold Club which made the software and hardware for slot machines. He then spent a year in Silicon Valley looking at different business models and industries.
“The problems had been in front of me all the time, but I never really saw them,” he said of his eye-opening experience.
He came back to Mexico with a “startup mindset” - one of building a lean startup with fast growth potential - and he knew he needed to find a pain point in the market and a team that aligned with his ambitions and methodology.
While he looked at health insurance and life insurance as possible businesses, he settled on car insurance because of the potential.
“We like cars because the frequency of accidents is high. 20% of cars have an accident every year,” Orozco said.