InsureTech Laka secures $4.7 million in funding and sets sights on European expansion
Community-driven insurance tech company Laka has successfully raised $4.7 million in funding after a round led by early-stage VC firms LocalGlobe and Creandum.
Laka, which has pioneered a fairer approach to insurance, initially focused on the cycling market, will use the funding to back its launch in the Netherlands in the first half of 2020. It will then use this base as a springboard to roll out across Europe and beyond. Its first product insures bicycles and cycling equipment against theft or damage at a cost around 25% lower than average.
Launched in January 2018, Laka has pioneered a community-driven approach to insurance. Laka's customers work together to share the cost of claims, with Laka handling each one. It divides the cost fairly and limits each customer’s maximum monthly spend to a cap based on the value of the equipment insured.
All of Laka’s insurance policies are backed by Zurich, and all of its claims team, most of which are ex-cycling mechanics, are based in-house.
Out of the full $4.7 million, funding has also been provided by Yes VC, the venture fund founded by Flickr Co-founder Caterina Fake and Jaiku and Ditto Co-founder Jyri Engeström; Nick Evans, Chairman Rapha; and Oren Peleg, former CEO of Fitness First.
Tobi Taupitz, CEO of Laka, said: “Cyclists should be able to completely trust their insurance providers - through our community-based approach, we are bringing our customers, many of whom have previously been ill-served by legacy players, a product that ensures fair treatment, trustability and transparency. We’ve seen a fantastic response from the British cycling community, who have become our greatest advocates, and we’re looking forward to launching Laka across Europe and beyond.
“The applicability of this model is really exciting. Ideally suited to high frequency and low severity forms of insurance, our ultimate ambition is to roll out Laka insurance products for a range of different purposes. From covering the equipment of the 138 million outdoor sports enthusiasts across Europe, to personal accident cover and beyond, our mission to create a community driven, transparent approach to insurance has only just begun.”
Remus Brett, Partner at LocalGlobe, said: “The beauty of Laka is it returns insurance to its pure, mutual heritage. Laka’s members and their shared interests incentivise positive behaviour which in turn benefits the entire community. These principles are over 300 years old, the difference being technology and increasing consumer awareness that traditional insurance models, with complex clauses, excesses and a painful claims process are fundamentally broken.”
Carl Fritjofsson, Partner at Creandum, said: “The word disruption is used all too often in the world of entrepreneurship, but with Laka it actually fits very well. This is a fundamentally unique and different approach that turns the old business model of insurers upside down. Laka truly improves the user experience 10x as well as lowers costs for its policyholders, all while providing a fair and transparent insurance coverage. What’s not to love?.”