Hedvig Secures $45M Funding to Expand Millennial Insurance in Europe

Millennials and the Future of Insurance: Hedvig Secures $45 Million

A significant trend is emerging within the insurance sector: the increasing importance of millennial consumers. A Swedish startup focused on meeting the specific requirements of this demographic has recently announced a new funding round to accelerate its expansion. Hedvig, a neo-insurer offering property, travel, contents, and accident coverage tailored for younger adults – including a unique “clumsiness” policy and charitable contributions from profits – has successfully raised $45 million in a Series B funding round.

Funding Details and Investors

Anthemis, a firm specializing in investments within the fintech and insurance industries, spearheaded the round. Existing investors, such as Cherry Ventures, Obvious Ventures, and CommerzVentures, also participated. Additionally, new investors including Swedish Novax, Nineyards Equity, Jonas Kamprad, and Mathias Kamprad joined the investment.

While the precise valuation remains undisclosed, this latest funding brings Hedvig’s total funding to $68 million.

Expansion Plans and Market Reach

Currently operating in Stockholm, Norway, and Denmark, the company intends to utilize a portion of the funds to launch in a fourth, as-yet-unnamed country outside of Scandinavia. Further investment will be directed towards expanding Hedvig’s team and broadening its product portfolio.

The startup currently serves approximately 70,000 customers, with the majority being under 30 years of age. Consequently, the focus will remain on developing additional products specifically designed for this demographic.

Strategic Licensing and Future Growth

Earlier this year, in March, Hedvig obtained an EU-wide insurance carrier license, positioning the company for both geographical and product expansion. According to CEO and co-founder Lucas Carlsén, “One of the primary motivations behind transitioning to a full-stack carrier was to better serve our members as their life circumstances evolve.” He added, “This naturally leads to a planned expansion of our offerings in the future.”

Impressive Growth Trajectory

Hedvig has demonstrated substantial growth in recent years. When its August 2019 raise led by Obvious Ventures was reported, the company had 15,000 customers. This represents a customer base increase of nearly 370% over the past two years.

Notably, Hedvig benefits from strong organic growth, with approximately 40% of its month-on-month expansion attributed to word-of-mouth referrals.

A New Approach to Insurance

Co-founders Lucas Carlsén, Fredrik Fors, and John Ardelius, themselves members of the target demographic, initially conceived the platform around the idea of “nice” insurance. This translates to products that are simpler, more affordable, faster to utilize, and more aligned with the preferences of millennials.

Initially focused on insurance for rented or owned properties, Hedvig’s homepage now showcases a young individual performing a wheelie on a bicycle in a European city, reflecting a broader scope.

Disrupting the Insurance Landscape

The insurance industry has experienced significant transformation in recent years, driven by technological advancements, increased smartphone usage, and evolving consumer expectations. Inspired by the fintech sector, companies are leveraging APIs to deliver comprehensive services, prioritizing customer relationships and enhanced user experiences.

Several insurance providers, such as Marshmallow in the U.K., Lemonade in the U.S., YuLife, and Ethos, are pioneering mobile-first, user-friendly experiences or utilizing technology to reimagine insurance presentation. However, Carlsén asserts that Hedvig uniquely addresses the needs of a specific consumer – the adventurous cyclist.

Unique Coverage and Value Proposition

Hedvig offers a premium service for a discerning consumer base that demands exceptional service and rapid claims processing. Beyond traditional home insurance, the company provides “clumsiness insurance” covering personal belongings with a single policy, even reimbursing for self-inflicted damage – a type of lifestyle insurance currently uncommon in much of Europe.

Challenging Assumptions About Young Adults and Insurance

It’s often assumed that younger adults are unlikely to prioritize insurance due to limited disposable income, potential lack of property ownership, and a perceived sense of invulnerability. However, Hedvig’s success suggests the opposite, particularly when products are tailored to their lifestyles and values.

Social Responsibility and Business Model

Carlsén stated, “Our insurance experience has cultivated a cult-like brand following in just a few years,” noting that approximately 40% of growth is organic or driven by word-of-mouth. “We are now eager to extend our offering to markets where insurance is a more challenging experience than in the Nordics.”

Hedvig’s business model involves a 25% premium cut, with the remainder allocated to a collective claims pool for members. Any surplus from the pool at year-end is donated to charity.

Future Outlook and Demographic Expansion

Looking ahead, Hedvig anticipates expanding its reach to other demographic groups. Carlsén explained, “It’s unsurprising that the on-demand younger generation appreciates our commitment to service and swift claims handling.” He continued, “However, we are observing growing interest from other segments, with house insurance being our fastest-growing area.”

Investor Confidence and Industry Recognition

Ruth Foxe Blader, a partner at Anthemis, and Matthew Jones, an MD at the firm, jointly led this investment. Notably, Blader previously led an investment in Lemonade while at AllianzX. Jones will assume a board seat as part of this funding round.

Jones commented, “The Hedvig team possesses a remarkable combination of expertise in technology, design, and insurance. Their creativity and customer empathy provide a competitive advantage that will be difficult to replicate. Insurance is exciting again!”