InvestSure, a South African insurtech startup, has secured 9.6 million to expand its business into new markets.
The funding has been secured from Hannover Re Africa subsidiaries Lireas Holdings and Compass Insure, as well as venture capital firm, 4Di Capital – earlier this month, following a 2-year incubation at Compass Insure.
The direct investment from the specialist insurer is a big statement on the potential impact that InvestSure could have on the market.
The startup said the new round of funding has been earmarked to expand the business, which includes broadening the reach of the offering with existing partners, expanding into new markets and offering the product on other trading platforms to reach a wider number of investors in South Africa.
The InvestSure co-founders are Mbulelo Mpofana, Ignatious Nkwinika and Shane Curran.
InvestSure developed and manage an insurance product that insurers shares bought on participating trading platforms against losses from deceptive or misleading acts of management of those companies.
The team created a world first innovative insurance product, which protects innocent shareholders from loss caused by allegations of management fraud and dishonesty.
The idea was birthed by Curran, one of three co-founders, around the time of the VW emissions scandal.
While directors avoided culpability and liability, shareholders saw the value of their shares reduce suddenly by 40-60%.
“It seemed unfair that shareholders bore the losses when there was no way that they could have known about director dishonesty”, the co-founders say. “While directors have access to liability insurance to cover themselves, there was nothing available to the ordinary, innocent investor”.
InvestSure set out to change this.
InvestSure launched their product into the South African market with web-based trading platform Easy Equities in May 2018 – a platform that immediately saw the market relevance and the significant value-add that the product could deliver to their clients.
The product has since enjoyed seamless operational capability and has seen a significant spike in the uptake of investors purchasing the insurance with their shares in the past six months.
The relevance of the product has been spectacularly highlighted with shareholders suffering the consequence of management fraud in several high profile cases including MTN, EOH and the Resilient Group of companies. Investors who had the insurance were saved the pain of losses in the region of 50%, thanks to InvestSure.
As share trading volumes increase in South Africa and more and more people become active on trading platforms, the uptake of this service is expected to exponentially grow. In most industries where a safety net is available – like credit card protection – it really is a no-brainer to offer the product.
“It is very rare that a completely new and relevant insurance product finds its way to market so successfully. Coupled with an innovative and seamless user experience and excellent, young team, we are excited to see that InvestSure is developing traction in the South African market,” Valerie Hayter, MD of Lireas Investment Holdings, which has a shareholding in a stable of underwriting agencies and Insuretech companies.
“We are delighted to team up with 4Di and of course with our sister company Compass Insure which has the ultimate backing of Hannover Re, in taking InvestSure to the next level.”