INSURANCE: Can $250 Million Get Insurtech WeFox Past Lemonade's Litigation


German insurtech startup WeFox -- backed by Ashton Kutcher and banked by Goldman Sachs -- is in the market for $250 million of fresh capital to finance international expansion. That is a meaningful amount of venture for any insurtech company, especially one that just raised its Seed round in late 2014. See the table from Coverager below for the largest raises in their database in the space -- though we would advise you to ignore Theranos. Since 2014, WeFox has changed its name from FinanceFox, acquired ONE Insurance, and intermediated deals with a number of large underwriter incumbents.

So what kind of service do you need provide to deserve a unicorn round? Well, WeFox gives customers the ability to manage all their insurance contracts across products in one place, supported by a personal agent. They act as a mobile-first broker for individuals, and provide an outsourced front office to incumbents that aggregates different insurance use-cases into a single app. The app can be free because large insurance companies pay WeFox to get clients, and then to manage those clients. Can you say B2C2B2C?

Which brings us to ONE. Whereas WeFox is the insurance supermarket, ONE is a proprietary product on that supermarket shelf. And it has just been sued by Lemonade, the radically transparent renters insurance startup, for copyright infringement and reverse engineering. Allegedly, WeFox created fake accounts and made fake claims on the Lemonade app to copy its workflow and process. And Lemonade has hired an expensive law firm -- White & Case -- to litigate. This makes us ask three questions. First, is user interface something that can be protected by copyright? There must be something deeper to this story. Second, are startup ventures now so well funded that they make worthwhile litigation targets? And third, if insurance is ripe for disruption leading to a massive market for new companies, isn't it better to spend cash on acquiring customers rather than lawyers? 


Source: Pitchbook (WeFox Raise), Coverager, (Insurtech Raises), LinkedIn (Lemonade vs One), SPGlobal (Lemonade Growth)