MICROCAPITAL BRIEF: Toffee Insurance of India Secures $1.5m in Equity for Digital Microinsurance from Kalaari Capital, Omidyar Network, Accion Venture Lab

Toffee Insurance, an online microinsurance firm based in India, recently received a total of USD 1.5 million in equity from Accion Venture Labs, a fund of US-based NGO Accion; Kalaari Capital, an Indian for-profit investment firm; and Omidyar Network, a US-based NGO. Toffee will use the proceeds to develop new insurance products and form a division that will use technologies such as artificial intelligence to improve the way it matches customers with products. The ownership structure and the amounts invested by each party remain undisclosed. The firm’s only previous external investment was placed in July 2017 by private investor Vivek Gujral of India in the amount of USD 100,000.

Founded in February 2017 in the city of Gurgaon, Toffee targets uninsured individuals below the age of 30. The firm sells policies covering sickness, personal injury, and household theft and fire from insurers such as Germany-based Apple Munich and two Mumbai-based firms, HDFC Ergo and Future Generali. As of June 2018, the average annual premium for policies listed on Toffee’s website is INR 489 (USD 7.25). The number of Toffee customers remains undisclosed.

Formed in 2006, Kalaari Capital is a privately owned venture capital firm based in Bangalore that invests primarily in technology companies in India. In 2016, it created its only subsidiary, Kstart, a fund that focuses on startups. As of 2018, Kalaari Capital manages investments valued at USD 650 million, placed in 45 companies.

Founded in 2004, Omidyar Network provides loans, equity investments and grants to “socially responsible” organizations active in microfinance, entrepreneurship, property rights, social media, marketplaces and government transparency. At year-end 2017, the company reported USD 545 million in total assets, including USD 59 million in “program and mission-related investments.”

Accion Venture Lab, which was created in 2011, describes itself as “interested in technology and business model innovation as well as new approaches that help underserved people and small businesses benefit from the world’s formal economy.” Its typical investment is an equity placement of USD 300,000 to USD 500,000. The majority of Accion Venture Lab’s investees are involved in the microfinance and fintech sectors. The firm focuses on seed-stage startups and its portfolio consists of 32 enterprises, five of which are based in India as of May 2018.

The mission of Accion is to alleviate poverty by offering service such as microenterprise loans and business training. Accion was founded in 1961 and issued its first microloan in 1973 in Brazil. Accion’s partner microfinance institutions (MFIs) provide loans to men and women entrepreneurs through 64 MFIs in 32 countries in Africa, the Americas and Asia. During 2016, the network disbursed USD 10.9 billion in loans, and it held USD 4.2 billion in savings deposits as of December of that year.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

Accion press release
http://accion.org/content/toffee-insurance-closes-15-million-seed-funding

Toffee Insurance background
https://toffeeinsurance.com/products

Kalaari Capital background
https://www.iimjobs.com/showcase/kalaari-capital-2428.html

Kstart background
https://kstart.in/about-us/

Omidyar background
https://www.omidyar.com/investees?initiative=&region=asia&search=#filter

Omidyar financials
https://www.omidyar.com/sites/default/files/financials/2017_AuditedFinancial_Statement.pdf

Accion Venture Lab background
https://www.accion.org/venturelab?_ga=2.124998538.1273887441.1527779345-1042322064.1527779345

Accion’s “Annual Report 2016”
http://annualreport.accion.org/?_ga=2.155948219.1273887441.1527779345-1042322064.1527779345

Accion financial data 2016
https://www.accion.org/sites/default/files/ACCION%2012-31-16%20FINAL.pdf

MicroCapital article; January 15, 2016: Omidyar Network Leads Investment in eCurrency Mint to Support Technology That Enables Central Banks in Issuing Digital Currency https://www.microcapital.org/microcapital-brief-omidyar-network-leads-investment-in-ecurrency-mint-to-support-technology-that-enables-central-banks-in-issuing-digital-currency/