Insurtech ‘barely at beginning of development’: Twelve Capital and Eos
In December 2021, Twelve Capital and Eos Venture Partners announced they had joined forces to provide growth funding for insurtech companies. The pair are set to launch a fund focused on later stage growth capital (primarily Series C and beyond) for fast-growing companies in the insurtech arena.
While both Urs Ramseier, executive chairman and chief investment officer of Twelve Capital, and Carl Bauer-Schlichtegroll, founding partner of Eos, remained tight-lipped about the size, format and timing of the fund (in light of strict pre-marketing rules), the duo emphasised the synergies between the two companies.
Ramseier noted that while Twelve Capital, an investment manager specialising in the insurance industry, covers nearly all asset classes, the private equity piece of the puzzle had been missing in its offering. The new fund, said Ramseier, is a “great opportunity to have exposure in the venture capital/private equity space”.
Bauer-Schlichtegroll added that for Eos, an insurtech venture capital fund manager, the investor base brought by Twelve Capital is complementary to Eos’ own investor base. He said there are plans to leverage these investor bases and each other’s networks, in addition to sharing an understanding of insurance.
“Cyber could be the biggest risk class to be insured going forward.” Carl Bauer-Schlichtegroll, Eos
Ramseier said: “The insurance sector is special—it’s highly regulated, with different accounting and different dynamics and we both specialise in the sector. There are not many companies out there truly focusing on the insurance sector, so it’s a natural fit that we work together.”
The growth fund is going to “feed itself from the more mature, fastest-growing and best opportunities” out of Eos’ existing earlier stage fund, added Bauer-Schlichtegroll.
“That is going to be majority of the focus of the fund. We diminish the blind risk in terms of not having to invest in untested business models, but rather investing in businesses we understand, know and have funded in the past,” he added.
Essentially, said Bauer-Schlichtegroll, this is a “winners’ fund”, which represents an "opportunity to double down on the best performing companies”.
Big changes ahead
The launch of the growth fund is expected to take advantage of the development of insurtech, a sector that both believe has just begun.
Bauer-Schlichtegroll compared the development of insurtech to the emergence of the internet and internet business models in the late 1980s and early 1990s.
“We would argue that’s where insurtech is positioned today,” he said. “We are very bullish in terms of the embedded nature of innovation and digitisation (what we call insurtech), not only in the existing insurance models but in many other business models.”
He believes that insurtech is becoming increasingly omnipresent across the value chain. In its earlier moments, insurtech was very focused on property and casualty (P&C) shorter tail businesses as that is what people buy most frequently, according to Bauer-Schlichtegroll.
“We understand the businesses and the dynamics of the industry.” Urs Ramseier, Twelve Capital
Now, the insurtech model is expanding in all segments across the insurance value chain, “in terms of internal plumbing (such as better data management, payment systems, and claims processing), but there will also be a much stronger interest in terms of how that can play in other, non-P&C, businesses”, added Bauer-Schlichtegroll.
He anticipates this expansion to continue gradually, and that the partnership of incumbents with insurtechs is in its early stages.
For example, cyber could be the biggest risk class to be insured going forward, said Bauer-Schlichtegroll, adding that nobody has yet figured out the right approach but that there are a “lot of interesting models and insurtech is going to play a dominant role”.
In agreement, Ramseier expects a “big change” in the insurtech space in the coming years and believes there will be winners and losers. Twelve Capital’s and Eos’ venture into the insurtech arena is a move that will hopefully put the two companies on the winning side.
Ramseier concluded: “There aren’t many insurance specialists investing in these companies. We understand the businesses and the dynamics of the industry and that is of high value for the founders and the management team of the portfolio companies.”
