The Naked Team. Image Credits: Naked
SA-based Insurtech startup, Naked, has closed its Series B2 funding round with a sum of $38 million (R700m). The round saw participation from global investment firm BlueOrchard, along with existing investors like Hollard, Yellowwoods, the International Finance Corporation (IFC), and Germany’s DEG.
This funding round will go down as the largest investment in the African insurtech landscape to date. The capital will be channeled into accelerating Naked’s expansion, improving its technology platform, and meeting regulatory capital requirements. This highlights an increasing investor interest in the continent’s growing technology landscape.
Naked came into being when former Ernst & Young executives and actuaries Alex Thomson, Sumarié Greybe, and Ernest North founded the insurtech company in 2018. Naked’s unique selling point is a fully digital, AI-managed insurance platform. The company offers car, home, and single-item insurance policies that are totally online, boasting of being able to provide final quotes within 90 seconds. With Naked’s digital app, customers can manage their policies which many range from purchasing coverage, submitting claims, and pausing coverage, all without human interaction. This streamlined approach to insurance aligns with the preference of a digitally-inclined customer base, which has brought about the company’s rapid growth.
“This investment marks an exciting milestone, as we continue to define a new category of insurance,” says Alex Thomson, co-founder of Naked.
“It’s a strong vote of confidence from both our existing shareholders and our new investor, BlueOrchard. Their support validates the success of our business model and highlights the significant progress we’ve made in making insurance more accessible and convenient…Building off the base of a loyal community and unique technology platform, we are positioned for strong growth in the years ahead.” Alex added.
“The Naked Difference”, Naked’s business model, aims to address perceived conflicts of interest inherent in traditional insurance. The company operates on a fixed percentage of premiums while donating any surplus from unclaimed funds to customer-selected charities. This model seeks to align the company’s interests with those of its customers, removing the incentive to deny valid claims to boost profitability.
The latest funding round will enable Naked to invest further in automation and AI, expand its product portfolio, broaden its market reach, and increase marketing efforts. The company also faces the challenge of navigating a complex regulatory environment. The capital will help it meet the rising regulatory capital requirements associated with its rapid expansion.
“Naked’s focus on using technology to expand access to insurance fits perfectly with our InsuResilience Investment Fund strategy. This funding will help Naked broaden its reach and develop new products that strengthen the financial resilience of its customers.” says Richard Hardy, private equity investment director for Africa at BlueOrchard.
While Naked’s model has proven successful in its home market, international expansion presents both opportunities and challenges. Adapting to different regulatory frameworks, consumer preferences, and competitive landscapes will be crucial for its future growth.
