Rethinking insurance for the sharing economy: Why we invested in Omocom
Buying insurance in the 21st century is not easy: the user experience is poor, the process is the opposite of smooth, and the benefits are uncertain and distant. It remains a product category consumers only have little trust in, consider complicated, inflexible, expensive, difficult and annoying to buy. On the insurers’ side, they have to spend huge amounts for distribution and customer acquisition, amounting to almost 50% of the total costs.
Besides the distribution challenge, today’s traditional insurance policies for property (e.g. goods, cars, pets, etc.) and related property damage to third parties are designed for an economy focused on ownership. However, there is a significant behavioral shift from owning to sharing across a multitude of categories. The global sharing economy is set to reach $335bn by 2025, with one key driver also being an increased shift towards sustainability. According to a study by Capgemini, 79% of consumers are willing to adjust their purchasing behavior based on the global agenda for sustainable development.
Omocom, a Swedish embedded insurance provider and member of the Lightbird portfolio, combines and solves these two problems by providing API-based, short-term, micro-insurance policies that can be integrated into products on platforms. The platforms can thereby increase trust and lower barriers of adoption for their customers while simultaneously driving more sustainable consumption choices.
Read on to find out why we think Omocom is uniquely positioned to conquer the embedded insurance space and why we are excited to join forces with Ola, Tobias and the whole Omocom team.
📊 Market
Funding in European insurtech startups has seen unprecedented growth in 2021: A staggering EUR2.7bn were invested in the 2021, topping 2020 by far. Global VC investment in insurtech has grown 4.1x from 2016 to 2020 (as a comparison: Fintech only grew at 1.4x). According to a report by Dealroom and Mundi Ventures, European insurtech startups have a combined enterprise value of EUR 23bn as of the beginning of June 2021. The $50M+ unicorn club comprises players like Wefox (GER), Alan (FR), Zego (UK), Friday (GER), Luko (GER) and many more
Within the insurtech space, embedded insurance is part of the overall trend towards a more fragmentized insurance stack. Single insurance functionalities are abstracted through technology and integrated into the workflows across the insurance ecosystem. The value proposition of embedded insurance is to unify the buying experiences (e.g. car + insurance) and to make the insurance default ON. The market is growing rapidly: Embedded insurance in the property and casualty market alone is expected to reach 24% of market share by 2030, a 12x increase from the 2% it has today.
⚙️ Product & Technology
Omocom provides customers with insurance right when they rent items on P2P sharing platforms like GoMore, or make a purchase on B2C marketplaces like Tiptapp and refurbished electronics platforms like Refurbly.
Its API is easily embeddable and flexible, enabling seamless user experience, data collection and scalability. Furthermore, the risk engine makes individual risk calculations for each transaction in real-time.
By integrating Omocom’s insurance solutions, the P2P platforms and B2C marketplaces can increase trust, loyalty and retention as well as get access to a higher margin revenue stream. The customers on the other hand get the insurance products when they need them (and only for as long as they need them) and consequently profit from a more streamlined customer experience.
When testing out the product, we were not only impressed by the simple front-end but also by the clearly structured tech stack. The technological infrastructure is well-thought-through and built for scale right from the start.
🤝 Team
Already in our first meeting it became clear that the CEO and Co-Founder of Omocom, Ola Lowden, is not only an entrepreneur who wants to build a successful business. He also has the ambition to contribute to a more sustainable future. It was crucial to him that we as investors understand what Omocom is really about, i.e. a mission-driven company that is beyond purely offering insurance. Omocom envisions to become the provider for circular insurance that catalyses a change in the way we consume, encouraging the re-use of products as a means for a healthier and more sustainable planet.
On his mission, Ola is accompanied by his Co-Founder and CTO Tobias Mård. He and his team are the driving force behind Omocom’s stable and strong technology infrastructure. The company culture is to a large extent driven by Tobias’ motto “With trust comes growth”. Continuous communication and collaboration within the company are other key values at Omocom. As a remote-first company, Ola and Tobias knew how important it is to build and sustain such values from the beginning. The company has set up a modern tech stack to support cross-border collaboration, and employees remain flexible in when and where they work.
🚀 It’s time to grow
By participating in this pre-Series A round alongside the lead investor Mundi Ventures and the co-investors Inventure, Mustard Seed Maze and Luminar Ventures, we are excited to make our first investment in the insurtech space and are looking forward to working closely with the whole Omocom team.
