Barking up the ‘right’ tree — our investment in Lassie
You never know who you will meet
It was summer 2016. I had spent my first year at Goldman Sachs and was introduced to one of the most ambitious new interns. She was driven, curious and smart. Seven years down the line, Hedda and I crossed paths again, this time as founder and investor…
Rob Moffat (who already started writing about disrupting insurtech in 2015) and I are very excited to have announced Balderton’s Series B investment in Lassie’s most recent funding round, followed by existing investors Felix Capital, Passion and Inventure, as well as familiar angels (including some of our own portfolio founders) such as Fredrik Hjelm (Voi), Carro Hjelm (Voi), Indra Sharma (Peak), Daniel Linden (Tibber), Karl-Johan Persson (H&M) and Susanna Campbell (on the board of Northvolt & Kinnevik).
The case for pet insurance & care
Pet ownership is increasing, with almost 60% of UK adults owning a pet. There are a range of social drivers behind this trend — from the rise in flexible and hybrid working to millennials delaying, or opting out of, parenthood. We’re spending more time than ever with our pets, and we increasingly view them as family members.
It’s therefore hard to set a monetary value on what their lives and wellbeing are worth. In the context of insurance, it leads to a fundamentally different and more emotional product, versus a more utility-driven product, such as motor insurance.
In recent years, the veterinary sector has seen increased consolidation and professionalisation, often with private equity backing. What’s more, wider progress in health R&D has impacted the sector, making previously incurable conditions possible to treat in pets. In the UK, this is clearly reflected in vet bills, which have more than doubled in the last 6 years (and the recent macro environment hasn’t helped).
Consumer spending on veterinary and other pet services in the United Kingdom from 2005 to 2022 (in million GBP)*
In short, in today’s society, we have more pets, and we care for them more deeply than ever. As the cost and care options have increased, fewer people can afford out of pocket vet bills, driving an acceleration of owners getting health insurance for their pets. The health insurance penetration varies greatly across markets. In Sweden, ~90% of dogs have health insurance. The equivalent in the UK is ~60%, but most other European countries have a penetration of less than 10%.
Lassie is not alone in spotting this opportunity, but we’re yet to see a $10bn+ company in the space. Agria (Sweden) and Trupanion (US) have been reasonably successful, but late in technology adoption and never managed to build a relationship with the customer beyond insurance. This has paved the way for Many Pets (UK), a highly ambitious startup — though successful international expansion is yet to be proven in the industry.
What’s more, pet insurance itself is only solving part two of the problem — the financial burden when pets are already ill. But not part one — how to make them healthier in the first place. And that’s what makes Lassie so unique.
Lassie’s differentiated approach and market leadership
Lassie is built on the thesis of preventive health. With more than 40% of injuries being avoidable, education and prevention play an important role. Lassie wants to be a part of the solution, and is incentivising pet owners that engage with their platform and educational content by offering a corresponding discount on their premium. This creates a ‘win-win’ model: the owner is more likely to have a healthy pet, and Lassie a more profitable customer. This loop also drives high engagement, and positively contributes to Lassie’s high organic growth.
Since launch in 2021, Lassie has proven excellent performance in Sweden — the world’s most mature pet insurance market — and taken on Germany, a larger but less mature market, with strong initial success, recently passing 60,000 pets insured across the two markets.
Lassie has impressed us with incredible execution, fast expansion to new markets, and market leading insurance metrics. Being relentlessly focused on automation, Lassie’s platform and ‘barkoffice’, erm..I meant backoffice, is powered by technology normally not applied in insurance. This enables Lassie’s lean team of 25 people to perform all core functions in-house, including claims processing.
As a female investor, I’m not sad to say my colleague Rob will be a minority here. Lassie is female-led, with two of the three founders being women. This trickles down to the rest of the team — 75% of Lassie’s employees are women, and >50% are women in the tech and product team. Also, last but not least, this is reflected in the ownership of the company — 33% of angels are women, and excluding VCs, there is a >50% female ownership in the cap table.
Hedda’s ambition, speed, and drive has, if anything, accelerated. And together with her co-founders Sophie, previously head of pet insurance at a market leader, and Johan, who built tech for King and Spotify, we’re excited to see Lassie take larger steps into more European markets, and emerge as the European winner.
Thank you Lassie team for choosing us as a partner for your journey!
