In a move that further cements its focus on the insurance industry, Naspers’s SA-focused venture capital unit has invested R120m in digital insurer Naked Insurance, its largest deal yet.
Its Foundry unit had led an $11m (R160m) funding round for Naked Insurance, an artificial intelligence (AI)-based insurance platform, investing $8.3m, Naspers said on Wednesday.
Naspers Foundry is the group’s SA-focused R1.4bn early-stage tech investment fund.
Naked Insurance is Foundry’s second insurance investment announced in the last two weeks. In late July, Foundry invested R34m in Ctrl, an online company that provides short-term insurance advice.
“We really like insure-tech,” Fabian Whate, head of Naspers Foundry, said. “The sector has a large total addressable market that is still early in its digitisation journey, so we see lots of opportunity.”
Cofounded by actuaries Alex Thomson, Sumarie Greybe, and Ernest North, Naked Insurance uses AI and automation to let customers do all of their insurance business online, a departure from the phone and form-based systems in use.
The company says customers can get a final insurance quote “for their home, its contents, their stand-alone items or their car in less than 90 seconds, and switch or pause their cover, all online, without speaking to a contact centre agent”.
Reduced costs
The automation and use of AI reduces the number of people that their company would ordinarily have to hire to service customers, thus reducing the overall cost to operate the platform, said Thomson. The reduced costs are passed on to customers, which has helped to set Naked apart from its competitors, he said.
Having been originally backed by insurance giant Hollard and investment firm Yellowwoods, getting Naspers to invest in their business will help with their ambition to grow further, taking the fight to established players such as Old Mutual and Sanlam.
“Hollard and Yellowwoods have been fantastic in supporting our vision to date, but we needed to bring in another partner who had the potential to take this all the way,” said Thomson.
“We see the market going through a fundamental change and with that is an opportunity to build up a meaningful player in SA and certainly other markets. Naspers, like us, is excited in that future. They were our number one choice as a partner.”
Naked says it will use the new funds to add more people to its team, investing in the product and platform, as well as to spread the word about its offering to grow its customer base.
The start-up has previously raised R50m in seed funding and has a team of 50 staff.
Digital maps
The investment in Naked marks the seventh one for Foundry since its inception.
In addition to backing Ctrl, the fund recently invested R42m in WhereIsMyTransport, a Cape Town-based start-up specialising in creating digital maps of informal transport routes.
In 2019, Naspers backed Aisha Pandor’s online home-cleaning services business, SweepSouth, with R30m. In May 2020, the unit made its largest investment by putting R100m into agritech business Aerobotics.
In September of the same year, it invested an estimated R25m in Food Supply Network, a business-to-business online marketplace that integrates food ordering systems across the food services industry.
In November, the venture unit invested R45m, its second-largest investment so far, in online learning platform The Student Hub as the group beefed up its portfolio of education technology (edtech) businesses.
Naspers’s international unit Prosus has large investments in companies such as China’s Tencent, Brazil’s iFood, Germany’s Delivery Hero and the US’s Udemy.
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