24 November 2023 Insurance

Risk exchange start-up CatX nets $2.7m to inject alternative capital into market

A digital marketplace for insurance risk, CatX, which aims to facilitate the flow of alternative capital into the sector, has raised $2.7 million in seed funding from top Silicon Valley venture capital firms.

CatX said its mission is to bridge the gap between supply and demand in the reinsurance industry, as the sector is facing a critical challenge due to a shortage in reinsurance capital, which has led to substantial price increases, especially for risks like natural catastrophes and cyber threats.

The company claims its innovative solution can offer more alternative capital to the market by offering high-return investment opportunities to institutional investors and providing them with the tools they need to understand insurance risks.

Earlier this year, CatX was accepted into the startup accelerator programme Y-Combinator, which has helped to build companies such as Airbnb, Instacart, Doordash, Monzo and Dropbox.

The company is currently working with over 15 institutional investors, including North American pension funds, hedge funds and structured credit funds.

Benedict Altier, co-founder and CEO of CatX, said: “Our goal is to help make the insurance industry more robust and adaptable in the face of increasing global challenges. In an era where the frequency and intensity of catastrophes are on the rise, the need for adequate capital to safeguard against these risks has never been more important. By channeling alternative capital into insurance, we're not only helping to close the growing protection gap but also unlocking a promising new asset class for investors that is uncorrelated to traditional investments like stocks and bonds.”

Lucas Schneider, co-founder and CTO, added: “At CatX, we focus on providing all the tools necessary for investors to understand and invest in insurance risk. Our platform features advanced risk models to generate actionable investment insights. A key focus for CatX is to make the whole investment process as simple as possible by digitising the workflow and utilising AI tools to shorten contract negotiations. Technological innovation is critical in attracting alternative capital providers that want sophisticated analytics and information tools.”

Sanford Lincoln from HackLegacy, a premier VC fund who invested in the round, said: “CatX offers a new model for the modern insurance market by opening access to investors outside of traditional reinsurance players and streamlining transactions with standardised paper and state of the art insights. CatX will help greatly expand reinsurance transaction volume to create a more liquid risk market to ultimately reduce costs and expand coverage opportunities for consumers across the world.”

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