South African startup InvestSure plans to take what it describes as its “world first” insurance offering into overseas markets in 2019 after receiving a positive reception at home and raising funding.
Launched to the public in May of last year, InvestSure is an insurance offering for investors, protecting shareholders against losses in shares of listed companies caused by allegations of management misleading or deceiving shareholders.
The product is completely automated, from buy to claim, and requires no documentation. The concept was dreamed up by co-founder Shane Curran in 2016, around the time the Volkswagen emissions scandal took place.
“I noticed that the directors seemed to be legally protected for the event, but shareholders lost 40 to 50 per cent of their investment in a matter of days. For most investors, there was no way they could protect themselves against this type of scandal, while management had insurance in place for just this,” he said.
InvestSure began life as a feasibility study backed by a global re-insurer Hannover Re in 2017, and initially rolled out exclusively on trading platform EasyEquities. Funded by loans, competition prize money and seed investment, it has had over 3,000 policy purchases since launch. Disrupt Africa reported last week it had secured ZAR9.6 million (US$685,000) in funding to expand.
“We are seeing constant increases in the number of purchases, repeat buys and new policies every month just on the one platform we launched with, and expect to see exponential increases as we get onto other investment platforms,” said Curran.
That will be happening soon, as the exclusive deal with Easy Equities is at an end, with Curran saying the uniqueness of the product made it very attractive.
“InvestSure is a world-first product. There is no other product in the world that uses traditional insurance capital to protect a share price against a risk like management fraud,” he said. “Therefore there is currently no competitor. Indirect competitors include hedging via shorting and derivatives, as well as investment strategies which could diminish the value of the product for an individual.”
With this in mind the startup, which takes a percentage of any premium sold using its platform, is planning expansion as quickly as possible.
“We are researching the Australian market which we will hopefully enter during 2019,” said Curran.
Scale is important for a business like InvestSure, with small margins meaning it needs to make itself as widely available as possible.
“Revenues are still small as the product is cheap and we take a very small fee of an already cheap product – our business is volume-based and will take a while to scale,” said Curran.
“Our primary focus is to get as many people exposed to the product as possible – if we see take-up at the current rates continue we will be very well placed when our distribution channel has increased.”
