General Atlantic is in talks to invest about $50 million in Acko, two sources familiar with the matter told TechCrunch, doubling down on its bet on the Indian insurtech at a time when most investors are treading investment opportunities carefully.
The New York-headquartered growth equity investor is positioning to lead a new financing round of about $100 million in the Indian startup, the sources said, requesting anonymity as the details are private. The new round — which is shaping up to be nearly entirely financed by existing backers — is likely to move ahead at a nearly flat valuation of $1.2 billion to $1.25 billion, one of the sources said.
The investment hasn’t closed, so terms of the deal may still change, the sources cautioned. Acko, which became a unicorn last year after securing a funding round led by General Atlantic, and the investment firm declined to comment Wednesday.
The new deliberations follow Acko engaging with PayU earlier this year to raise a round of over $200 million at a valuation of $1.8 billion, one of the sources said. It’s unclear why those talks fell through. Indian newspaper Economic Times reported last month that PayU had offered a term sheet to Acko.
Acko — which counts Lightspeed Venture Partners India, CPPIB, Amazon and Multiples Private Equity among existing backers — is among a handful of startups that is attempting to take on the country’s antiquated insurance industry with a digital-first product. It develops and sells bite-sized auto insurance products (aimed at drivers and others in transportation-related scenarios), healthcare protections to employers, as well as protection on gadgets.
The startup has distribution partners with a number of firms including Amazon, which is an existing investor in Acko, as well as travel and hotel booking platform MakeMyTrip, ride-hailing firm Ola, insurance giant Bajaj Finance and Urban Company.
Acko said last year that it covers nearly a million gig workers in the country through partnerships with companies, including food delivery giants Swiggy and Zomato.
Offering a large catalog of bite-sized insurance policies is crucial for firms in India. Only a fraction of the nation’s 1.3 billion people currently have access to insurance and most can’t afford sizable policies. According to rating agency ICRA, insurance products had reached less than 3% of the population as of 2017. An average Indian makes about $2,100 a year, according to the World Bank. ICRA estimated that of those Indians who had purchased an insurance product, they were spending less than $50 on it in 2017.
Its new funding deliberations come at a time when the dealflow activity has taken a severe hit in the South Asian market as investors grow cautious of writing new checks and evaluate their underwriting models after valuations of publicly listed firms take a tumble.
Indian startups raised $3 billion in the quarter that ended in September, down 57% from the previous quarter and 80% year-over-year, according to market intelligence platform Tracxn.