In December last year, Kenya’s Turaco, a digital insurance startup announced it has successfully raised $1.2m seed investment from investors Gan Ventures, Mercy Corps Ventures and Musha Ventures. Less a year after, the startup has followed it up with yet another US$2 million seed funding to further grow and scale its operations in Sub-Saharan Africa.
“We are thrilled to partner with Novastar Ventures and all of our other great investors to help build Turaco to the next stage of growth. Our vision is to insure a billion people in the next 25 years. Investors like these will help propel us to that reality,” said Turaco co-founder and chief executive officer (CEO) Ted Pantone.
Here Is What You Need To Know
- This round was led by Novastar Ventures, with participation from previous investors such Mercy Corps Ventures, Musha Ventures, GAN Ventures as well as Zephyr Acorn, and some angel investors who have previously invested in Turaco.
- Turaco will use the funding to drive growth in its current locations of Kenya and Uganda, and facilitate expansion into a third market next year.
- The financial support will also facilitate development of the next stage of Turaco’s proprietary technology and recruitment of key hires to position the business for continued growth in 2021.
Why The Investors Invested
Obviously, by breaking down the complex issues around insurance, Turaco is solving an important social problem. This is perhaps why the investors invested.
Co-founder Ted Pantone noted this in the press release on the investment last year saying that Turaco was “blessed” to be able to choose from a group of investors with different specialities.
“These range from social impact and value alignment to industry understanding and connections in Silicon Valley,’’ he said.
“In our next round of funding, we are looking for additional value-aligned investors who have the capacity to support us in our vision to insure a billion people.”
One of the lead investors Mercy Corps Ventures is notable for investing in social startups with the talent, drive and technical skills to design products and services to positively impact people in fragile places and emerging markets.
‘‘Mercy Corps Ventures (MCV) makes equity or convertible debt investments in and support these bold new ventures. We look for ventures pioneering solutions in financial services, agriculture, last-mile logistics, and youth employment. We’re an early source of capital for these ventures, which we then follow up with a significant investment of our time and expertise. That includes close consultation, technical support, and leveraging Mercy Corps’ global network of 5,000 staff across 44 countries, and the many relationships we’ve built across the private and public sector,’’ the VC noted on its website.
GAN Ventures, a VC recently launched in January 2017 is also notable for investing in startups regardless of where they are. The VC has already invested in startups across Lincoln, Nebraska; Los Angeles, California; Des Moines, Iowa; Cairo, Egypt; Wellington, New Zealand; Buenos Aires, Argentina, among others.
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Read also: How International Organisations Are Helping Startups In Africa
A Look At What Turaco Does
Launched in 2008, Turaco was the idea of Peter Gross who during his eight years working in financial services in sub-Saharan Africa (precisely Kenya and Uganda) saw time and time again how individuals with health issues would simply avoid going to the doctor for as long as possible, growing sicker and sicker.
The Turaco idea is based around the concept of a “nano-loan” — a tiny, short-term loan of hard cash. Customers would be pre-approved for nano-loans of $10-$25, accessible when they are sick or injured and need to pay for a medical service. The money is sent to them, often in the form of mobile money, so they can immediately seek care.
The customer then pays back the loan, plus $2-$10, over a period of four weeks. While they’re paying back the loan they also receive access to telemedicine services and hospital insurance.
To date, Turaco has insured over 70,000 people and seen almost 2,000 claims paid in an average turnaround time of less than three working days, and it plans to scale this impact after securing US$2 million seed investment.
Turaco works in partnership with other businesses to deliver the packages to its customers.
“We learned how to design a product that is good for the customer without costing them an arm and a leg,” says Gross.
Turaco’s subscription model enables consumers to opt in for automated medical policy renewals which are bundled with their existing payments. The startup says it has insured more than 30 000 users in Kenya and Uganda.
In June 2019, Turaco was selected to join the Catalyst Fund‘s fintech accelerator programme along with three other Africa-focused and one Brazilian startup receiving between $50 000 and $60 000 in non-equity funding.
In 2018, Turaco received a $40 000 grant from Villgro Kenya.
Currently based both in Atlanta and Africa, Gross, based offshore is the Head of Product while his co-founder and CEO Ted Pantone is permanently based in Nairobi, Kenya.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer