Marshmallow Insurance Raises $90M at $2B+ Valuation

Marshmallow Secures $90 Million to Expand Financial Services

U.K.-based startup Marshmallow has experienced significant growth by leveraging data science innovations to create auto insurance policies for immigrant communities and other traditionally underserved customers. Having now insured one million drivers and achieving a $500 million annual revenue run rate, the company has secured $90 million in new funding to facilitate expansion.

Expanding Beyond Insurance

Marshmallow intends to utilize this investment to venture into the broader financial services sector, alongside developing additional insurance products. These offerings are designed to appeal to a growing population, even considering the impacts of Brexit.

CEO Oliver Kent-Braham highlighted the demographic trends, stating that the U.K. is experiencing more workforce exits than entries, with 1.2 million migrants arriving in 2024 alone. “Migration is essential for workforce growth,” he explained, “and we aim to support individuals relocating to and integrating within the U.K.”

The company envisions this integration encompassing access to insured vehicles, and, in the near future, home insurance and loan products.

A "One-Stop Shop" for New Arrivals

Marshmallow is planning to launch its initial lending product later this year, with the ultimate goal of establishing a comprehensive “one-stop shop” for the financial and insurance needs of individuals new to the U.K.

This funding round is comprised of approximately 50% equity and 50% debt, valuing the company at just over $2 billion. This represents a substantial increase from its previous valuation of $1.25 billion in 2021.

The company’s growth is demonstrably evident. While Marshmallow insured 100,000 individuals in 2021, it now boasts one million insured drivers, prominently advertised through a noticeable pink outdoor campaign in cities like London.

Investment Details

Portage Capital is leading this investment round, with participation from BlackRock and Columbia Lake Partners. Existing investors, including Passion Capital, Investec, and Scor, are also contributing. To date, Marshmallow has raised approximately $220 million.

Discussions regarding this funding round began as early as January, with a portion of the equity stemming from convertible debt issued in 2023.

Navigating a Complex Insurtech Landscape

Marshmallow’s funding arrives during a challenging period for European insurance startups.

Contrasting Fortunes in the Insurtech Sector

The situation contrasts sharply with the struggles of WeFox, which, despite backing from major investors like SoftBank and Omers, has faced difficulties due to losses and complexities in its business model. WeFox has been forced to sell assets and seek emergency funding to maintain operations.

However, there are also positive indicators, with some insurtech companies demonstrating sustainable business practices. Those showcasing a robust technological foundation are attracting investor attention.

Ominimo, a Polish startup, recently secured a $10 million investment at a valuation exceeding $200 million, marking its first external funding round after achieving profitability through bootstrapping. Similar to Marshmallow, Ominimo began with auto insurance and is utilizing AI to refine risk prediction models.

Marshmallow’s Distinctive Approach

While data science and AI are becoming standard for insurance startups, Marshmallow differentiates itself through its commitment to inclusivity and diversity.

A Diverse Founding Team

Marshmallow was co-founded by Oliver Kent-Braham and his identical twin, Alexander, along with David Goaté. The founders emphasize the importance of diversity within the company’s leadership.

Marshmallow is notable as one of only two “unicorn” startups in the U.K. with a Black founder, the other being WorldRemit. Statistics reveal that only 3% of startups valued over $1 billion in the U.K. and the U.S. have Black founders.

Investor Perspective

At a time when diversity initiatives are being reevaluated, Marshmallow’s investors recognize the strength of its diverse leadership team.

Devon Kirk, GP and co-head of Portage Capital Solutions, stated, “A strong founding team is crucial, and we believe that financial services benefit from diverse perspectives and innovative solutions to address evolving needs.”