Leading investors in Wefox, the insurance technology company, are proposing a €25m (£21.1m) capital injection to counter a rival proposal from insurer Ardonagh to purchase a significant portion of the company. According to sources, London-listed Chrysalis Investments and Target Global have submitted a term sheet to Wefox in recent days, arguing that their proposal would preserve value for the broader shareholder base.
The proposed investment of €25m would also involve contributions from other Wefox shareholders and serve as a bridge until the company is able to sell its subsidiary, Assona, which provides insurance for electric bikes. This move comes amidst a heated battle for the future of Wefox, once considered one of Europe’s hottest insurtech start-ups.
Wefox has faced significant losses in key markets such as Italy, but its operations in the Netherlands remain profitable. The proposal put forth by Chrysalis and Target aims to steer the company towards overall profitability, which they believe is achievable next year.
However, Mubadala, the Abu Dhabi state fund, is in favor of a €550m (£433m) deal with Ardonagh, which would preserve its returns but potentially wipe out other shareholders and the company’s founders.
Sky News revealed last month that Wefox’s British CEO, Mark Hartigan, had warned investors of the company’s potential collapse within months due to regulatory and financial challenges. Just two years ago, Wefox was valued at $4.5bn (£3.6bn) in a funding round and had lenders such as Barclays and JP Morgan.
The company’s evaluation of funding options has brought it to a critical crossroads, joining other tech giants in Europe facing existential crises. Launched in 2015, Wefox sells insurance products through both in-house and external brokers and has often touted its goal of revolutionizing the industry through technology. It boasts a customer base of over two million.
In March, co-founder Julian Teicke announced his transition to the role of president, stating that it would allow him to focus on supporting founders in building their own ventures. Hartigan took over the role of CEO and has since cut 60 jobs in central functions, with more expected to follow.
In July 2022, Wefox secured a $400m (£315m) Series D funding round, valuing the company at $4.5bn (£3.6bn) and making it one of Europe’s largest fintechs. This was followed by a $650m (£512m) round in May 2021, with an additional $55m (£43m) in equity financing and debt funding from Barclays and JP Morgan a year ago.
When approached for comment, Chrysalis declined to respond.