While many Queenstown businesses face obvious challenges during the pandemic, a fintech start-up whose local operation is based in the tourist town has just closed a A$30 million ($30.7m) raise – led by Wellington-based venture capital company Movac.
“With NZ headquarters in Queenstown, Open is one of the growing number of tech
businesses that is helping the region diversify its tourism-reliant economy,” Movac partner Jason Graham says.
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“The concept of embedded insurance is new here, and we’re excited to have Open
positively impacting the technology ecosystem in New Zealand, both in innovating
the insurance landscape and growing its team with talented Kiwis.”
Movac invested in Open via its $250m Fund 5, which includes $30m chipped in from Crown agency NZ Growth Capital Partners’ $300m Elevate fund, which is bankrolled by the NZ Super Fund.
Open Insurance pitches itself as an “insuretech” – or a company that makes digital tools designed to make it easier to get, monitor or claim insurance all online (although it supports human call centre options as well).
The company has founding staff on both sides of the Tasman. Its other main office is in Sydney. But during the first five years of its life, it’s been doing business in Australia, where it’s underwritten by Holland Insurance. There, it’s garnered around 70,000 customers through its own insurance brand, Huddle, and through a white-label service that other companies can rebrand if they want to offer insurance, or take their existing business up the technology food chain.
The $30m Series B raise will be used to fund a launch into New Zealand by year’s end in partnership with Tower, which will see Open’s house-brand Huddle offered here, offering household, auto and other insurance.
A little further down the track, a UK launch is planned. “We want to be a global brand,” co-founder and joint chief executive Jason Wilby says.
In Australia, Open works with partners including ahm – part of ASX-listed Medibank – Australia’s largest private health insurer – which offers a white-labelled version of its service, and Telstra, which offers Huddle-branded home and car insurance as part of its “Telstra Plus” series of value-adds for its subscribers. EnergyAustralia is another partner.
Wilby says Open will also work with partners in NZ. He says those could include phone, power, car and car finance companies but at this point, he’s playing his cards close to his chest.
“It’s also a big opportunity because New Zealand has one of the lowest levels of competition in the OECD when it comes to insurance, with the market dominated by just two to three underwriters,” Wilby says.
And while Open’s local launch will be underwritten by a well-established player – the 150-year-old, NZX-listed Tower- Wilby says it will set the pace in terms of digital opens and transparency.
And he says that’s easier because his firm has recently started from scratch, while the established insurance giants have technology that’s developed incrementally over decades, and involves a mash of systems inherited via various mergers.
Wilby spruiks Open’s AI technology, which he says can be used to customise policies for punters in near real-time as their situation, or purchases, change. But he adds that in some cases, a partner can simply add web forms and other digital options at times when some insurances still make claimants join a phone queue for some queries (although if you do want to talk to a person, Open’s platform also supports that option).
The A$30m Series B round was also supported by UK company Latitude and Australian venture capital firm AirTree Ventures – a returning investor (Open has now raised a total of A$53m).
Neither Open nor lead investor Movac wanted to put a post-money value on the Series B raise, but AirTree includes the fintech in a group of its investments that have a private equity value above A$100m.
Wilby says Open broke into profit last year, and that its NZ and UK launches will be about growth. Some of the new funds will also be used to develop new insurance products aimed at the small-to-medium business sector.
Open isn’t the only case of a Kiwi firm leading a funding round for an Aussie fintech disruptor with plans to launch into New Zealand.
Bolton Equities – the investment vehicle of former Blues part-owner Murray Bolton – led a A$33m round for Nano (formerly branded Verteva,) a Sydney-based fintech angling to do the same all-digital trick for the mortgage market that Open is doing with insurance.
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