For more than half a decade, Zopper built a platform for small and medium businesses and helped merchants with invoicing and payments through the point-of-sale platform. It sold that IP to PhonePe in mid-2018, but instead of joining the fintech giant, Zopper has been working on a new venture from the start and independently of PhonePe. That insurance infrastructure API platform company said Tuesday it has raised $75 million in new funding.
The New Delhi-headquartered startup’s Series C funding was led by Creaegis. ICICI Venture and Bessemer Venture Partners, as well as existing financier Blume Ventures, also participated in the funding, the startup said. Zopper, an 11-year-old startup, has raised $96 million so far. It did not disclose the rating at which it closed the round.
Zopper works with insurance companies and creates personalized byte-sized products that it then delivers to distribution partners. This approach sets Zopper apart from many of its competitors in India who collect coverages from different manufacturers and try to reduce the distributors and reach consumers directly.
“If you look at insurance penetration in India today, it’s only 3 to 4%,” Surjendu Kuila, founder and CEO of Zopper, said in an interview. “If you’re trying to bring new people into the insurance world, you just can’t sell them plans that cost more than $37 to $50 a year.”
Offering insurance coverage to customers in smaller sachets has also proved unsuccessful because there is no margin for anyone to make money, he said.
soppy tries to solve this by partnering with banks, non-bank financial institutions, retail chains and mobility companies that already have a solid customer base. “These partners need an insurance platform, and that’s what we provide,” he said.
Kuila claimed that no other company is taking this approach and therefore has not been able to reduce their customer acquisition costs. “That’s why even Policybazaar [online insurance aggregator that became a public company last year] is not profitable,” he said. Zopper, on the other hand, has been profitable for more than 18 months, he said.
“Our position was clear from the start: there is already an infrastructure. Someone has made capital investments to build that infrastructure. So why don’t we use technology to streamline that instead of making everything from scratch,” he said.
Currently present in more than 1,200 Indian cities, Zopper works with more than 150 players in the industry, including retail group Amazon, ride-hailing startup Ola, retail chain Croma, phone maker Xiaomi, Japanese conglomerate Hitachi and Equitas Small Finance Bank.
“We truly believe in Zopper’s vision to transform and automate the insurance distribution model in India. Over the years, they have demonstrated their technological and product innovation value to their ecosystem partners and insurers,” said Prakash Parthasarathy, Managing Partner at Creaegis, in a statement.
“All of this has been accomplished in a highly capital efficient manner and our investment will help the experienced management team led by Surjendu and Mayank to scale up and improve access to a wider customer base. We are privileged to be their partner and we are committed to supporting their journey given our experience in this space.”
The startup plans to use the new funds to significantly increase its workforce and also explore opportunities to acquire smaller startups, Kuila said. There is no rush to go to the stock market. He said Zopper initially aims for nearly $1 billion in revenue and will make an initial public offering over the course of about five years.
The startup’s sale of its previous company to PhonePe was misreported by many as the acquisition by some news organizations. Kuila said PhonePe has never had a stake in Zopper and that the startup, which counts Tiger Global among its backers, continues to be supported by its early backers and new investors.
“Given ICICI Venture’s successful track record in the insurance industry, we believe Zopper is well positioned to capitalize on this long-term growth opportunity,” said Gagandeep S Chhina, Director of Private Equity at ICICI Venture, a firm that began investing in local businesses. more than 30 years ago. “We are excited to support the management team’s vision to establish Zopper as a leading Insurtech player with its scalable technology, multiple partnerships with insurers and partnerships with distribution channels across industries.”