Marshmallow, a London-based digital insurance provider, announced raising an $85 million Series B from existing investors and a $1.25 billion valuation, according to a company blog post.
The company says it will use the funding to develop and introduce new products aimed at younger consumers, to move towards expansion outside the UK and to continue improving its current motor vehicle insurance. It has already doubled its staff in the past year to about 170 people, and has plans to use funding to hire another 400 team members in the next two years, according to Insurance Journal.
Marshmallow provides motor vehicle insurance in the UK, with its core business model centered on using big-data, machine learning and algorithms to provide more competitive rates for consumers.
The Series B was raised exclusively by previous investors, including Partner Capital, Investec Bank and SCOR. The fundraise follows a $1.2 million seed round in 2018, a $30 million Series A in 2020 and non-disclosed non-equity assistance in 2021 by Future Fifty. The company has now raised at least $116.2 million in funding, and has quadrupled its valuation since its November 2020 Series A, according to TechCrunch.
“We try to use more data than our competitors to underwrite people and then to digitize everything. We need to hire about half what our competitors need to hire to support customers. We believe we’re really well-placed to take market share,” Marshmallow CEO Oliver Kent-Braham told CNBC in an interview.
Insurtech has been one of the fastest-growing segments of fintech, with global insurtech market funding growing to $7.4 billion in the first half of 2021, according to insurance broker Willis Towers Watson.
The company was co-founded by identical twins Oliver and Alexander Kent-Braham, and software engineer David Goaté, making Marshmallow the second UK unicorn startup founded by Black entrepreneurs. The first British Black-founded company, Zepz (formerly WorldRemit), is currently valued at $5 billion and was founded by influential Black Briton Ismail Ahmed.
The #2 spot is still impressive for Marshmallow, considering the scarce amount of venture funding going towards minority-founded tech companies. The numbers are telling, with only 1.6% of venture capital funding going to all-ethnic founding teams between 2009 and 2019, and only 0.2% of funding going to Black entrepreneurs, according to Extend Ventures.
In other recent fintech news, PayPal purchased Japanese BNPL Plaidy for $2.7 billion. UK super app provider Revolut also announced plans to add BNPL services and compete in the US with its new remittance service.