The insurtech space has gone through a tough time. About 7 years ago, early insurance companies promised to disrupt the insurance industry through new technology, but today, most of these companies have been acquired or are floundering in the public markets.
Fortunately, insurtech has found a new wave to ride in the past couple of years: “embedded insurance.” Insurer startups have had success helping third-party companies “embed” insurance products into their customer journeys to improve sales and retention – instead of buyers actively seeking coverage, insurance may appear as an add-on at the time of purchase customer journeys. For example. Investors seem to be excited about this model as well, though they point out that good economics and healthy traction are crucial factors for startups in this space today.
Carevoice, a provider of embedded insurance solutions that started in Shanghai and now has a footprint in 15 countries, clearly makes this math look attractive to investors in the space. The company just raised $10 million in Series B funding led by UK-based Apis Insurtech Fund I, which contributed most of the round. Investment brings The company's total capital increased to approximately $20 million.
This is notable, considering how much startup investment has slowed in the past year. In 2023, U.S. digital health startups raised a total of $10.7 billion across 492 deals, the lowest amount since 2019, according to Rock Health, a seed fund focused on health technology.
This funding slowdown has also hit Carevoice, although it has weathered the storm by accessing healthy cash flow. By mid-2022, the company had already received funding commitments for its Series B. But as the market turned at the time, one of its investors became “valuation sensitive” and significantly reduced the startup’s revenue multiples, said co-founder and CEO Sebastian. Godin told TechCrunch.
“We had to adjust our fundraising strategy,” he said. “We were on track to achieve profitability, so we rolled up our sleeves and were able to reach cash flow neutral from the third quarter of 2022 to date.”
The company doubled its revenue in 2023, and this year is on track to hit $10 million in revenue, a combination of recurring licensing payments and one-time implementation fees, he said.
“So, in the end, we were well positioned to complete Series B,” Gaudin added.
Embedded health solutions providers like The Carevoice could find themselves competing with traditional IT and consulting services companies, such as Tata's TCS. But Godin feels that health providers who choose to outsource their software needs will eventually realize the significant “cost and time” involved in “limited results.”
“It could be two or three years ago [customers] You see anything. And [in terms of] The cost, it's like several million dollars. Then you will be stuck. Health system management is still out of scope, which means that in the end, these custom software companies won't be managing, partnering with, and onboarding different health technologies.
Gaudin says The Carevoice can launch the first version of its health technology solution in less than three months, with the design process taking two to four weeks and development requiring another two months. For one of its largest clients, MetLife, the startup enables the insurer's 360Health app with functions such as disease detection through facial scanning and access to a network of nearby screening centers, as well as prevention across physical, mental and cognitive health.
Operating with a team of around 40 employees, Carevoice plans to spend its new funding on expanding partnerships with insurers across Asia, EMEA and the Americas, as well as investing in the next generation CareVoiceOS operating system. It was built for insurance companies.
