U.K. startup Marshmallow, which has gained significant traction in recent years by utilizing data science to tailor car insurance policies for immigrants and other underserved consumers, has increased its growth metrics. Having reached a profitable annual revenue run rate of $500 million with a million drivers insured, the company has secured an additional $90 million in funding for expansion.
The newly acquired funds will be directed towards Marshmallow’s venture into financial services, alongside the development of more insurance offerings aimed at an evolving population in the U.K., which continues to grow despite Brexit’s deterrent effects. CEO Oliver Kent-Braham highlighted migration as a substantial opportunity, noting that the U.K. sees more people exiting than entering the workforce, with 1.2 million migrants anticipated to arrive in 2024. Marshmallow aims to facilitate integration for newcomers by enabling access to insured vehicles, home insurance, and loans.
Marshmallow plans to introduce its first lending product later this year, aspiring to create a comprehensive financial and insurance solutions hub for new U.K. arrivals adapting to their new life. This funding round is split evenly between equity and debt and elevates the company’s valuation to just over $2 billion, up from $1.25 billion in 2021. The startup has increased its customer base significantly since 2021 when it insured 100,000 people, now reaching one million insured, backed by a notable advertising campaign in metropolitan areas like London.
Portage Capital spearheads this funding round, with contributions from BlackRock and Columbia Lake Partners. The company has previously been supported by Passion Capital, Investec, and Scor, accumulating approximately $220 million in investments to date. The fundraising was initiated as early as January, and part of the equity was procured through convertible debt in 2023.
This funding comes amidst a challenging period for European insurance startups. Competitor WeFox, formerly valued at $4.5 billion in 2023, has faced difficulties due to losses and complexities in its business model, resulting in asset sales and emergency financing. Conversely, promising developments in sustainable business models are seen in new entrants like Poland’s Ominimo, which recently secured a $10 million investment, signifying an optimistic future for tech-driven insurance solutions.
Data science and AI integration have become essential for modern insurance ventures, with Marshmallow distinguishing itself through its inclusive and diverse approach to its clientele. Co-founded in London by Oliver Kent-Braham, his twin Alexander, and David Goaté, Marshmallow is rare in its diversity; it’s one of only two U.K. “unicorn” startups founded by Black entrepreneurs, with WorldRemit being the other. A 2024 study revealed that only 3% of startups valued over $1 billion across the U.K. and U.S. have Black founders.
In a climate where diversity and inclusion initiatives are being rolled back in the U.S., Marshmallow’s investors recognize the strength that diverse leadership brings. Devon Kirk, GP and co-head of Portage Capital Solutions, emphasized the value of varied perspectives in financial services and their role in fostering innovative solutions.
