Bloomberg Línea — The Latin American startup investment market is starting to show positive signs, and July was the best month of the year with a volume of investment almost 10% higher than January, according to data from innovation platform Sling Hub.
iAlthough the landscape remains challenging for startups, some companies are managing to attract significant sums. A recent case is the Mexican startup Momento Seguros, recently licensed by Mexico’s National Insurance Commission (CNSF), which received $10.5 million from Mexican and international venture capital investors to begin its operations.
The company was founded by Lois Rogel and León Bartolomé (both former McKinsey employees) and Andrés Guerrero, a former Procter & Gamble employee. At McKinsey, the Spanish duo Rogel and Bartolomé worked with banks and insurers, especially in Latin America.
In an interview with Bloomberg Línea, Rogel mentioned that during his consulting experience he noticed that the technological infrastructure and processes of insurers in Latin America were highly inefficient. Momento Seguros has built a customer-centric product with four main attributes: the first of which is personalized pricing for each user through pricing algorithms.
The second attribute is the flexibility offered to users to add or remove coverage as needed, rather than having a “package format.” The third aspect is the accessibility to accept monthly cash payments for unbanked customers, which is common in Mexico.
“When we started analyzing the Mexican market, we saw that it is a market with very consolidated players, with 70% or more of the insurance market and very high margins,” said Rogel.
“Despite reaching a peak of $4.9 billion in investments in the second quarter of 2021, the financing of the insurtech market, that is, technology companies operating in the insurance market, began to decline, and in the fourth quarter of 2022, it reached the lowest level in the last 20 quarters, with only $800 million invested,” according to Boston Consulting Group.
However, the Latin American region has recently recorded rounds for insurtechs, such as for Justos, an automotive insurance company that received an investment of 32.5 million reais ($6.6 million) earlier this year, and Latú, focused on providing insurance coverage for Latin American companies, which closed its first investment round of 5 million reais ($1 million).
Rodrigo Maranhão, an analyst at Boston Consulting Group, points out that it is important for insurance startups to adopt a cash generation and profitability-focused mindset at this time, but also to be attentive to merger and acquisition opportunities. “The next phase of sector growth will come, but business resilience must be a priority at this time,” he said in a statement.
These are the startups that raised funds this week:
Momento Seguros
In addition to the co-founders, Momento Seguros launched its platform with leading executives from Zurich Mexico, ING, and Qualitas, the largest automobile insurance company in Mexico.
The initial funding of $10.5 million for Momento was led by Foundation Capital and HSCM Ventures, with the participation of Gilgamesh Ventures, Picus Capital, Wollef, Clocktower Technology Ventures, BoxGroup, GFC, Y Combinator, as well as individual investors such as Iñaki Berenguer and Miguel Burger-Calderón.
Rogel’s idea is to bring to the insurance world “what is already happening with banks in the digital revolution,” he said.
“We conducted extensive research, spoke with many industry people, experts both within McKinsey and within governments,” he added.
Inklo
Inklo, a Brazilian startup providing medical procedure credits, recently completed a pre-seed round with a total investment of 3.5 million reais (around $719,000).
The new funding of 2 million reais, raised from angel investors and finalized in July of this year, adds to the 1.5 million reais it raised in November 2022, marking a significant advance for the company.
Founded in August 2022 by Igor D’Azevedo, the company handles the integration and credit concession process with clinics and hospital networks.
The company aims to expand its operations to all states in Brazil by the end of the year, achieving 30-fold growth in the number of partners and a 700-fold increase in credit origination by 2023. The company’s network currently includes 300 clinics and hospital networks, and it aims to reach 1,000 by the end of this quarter.