What Nigerian fintech Okra is to African fintechs, Lami Technologies is to insurance companies in Africa. And so, coming out of Kenya, Lami Technologies, has raised $1.8 million in a rare seed funding round to provide ready-made and cheap insurance products to African consumers.
Accion Venture Lab, a seed-stage investment company that funds financial services for underserved markets, led the round. AAIC, Consonance, P1 Ventures, Acuity Ventures, The Continent Venture Partners, and Future Africa were among the other VCs who took part.
Lami plans to use the seed money to recruit more staff, upgrade its infrastructure, and expand its reach across Africa.
Read also:Moneta Finally Cracks Open International Ecommerce Payments System In Ethiopia
“For us, the main problem we wanted to solve was that 97% of Africans don’t buy insurance. We were trying to understand the methodology behind that, especially in Kenya where there are over 50 insurance companies but the penetration level is 2.4%,” Lami CEO Jihan Abass, said.
Why The Investors Invested
The investment by investors in this round represents a lot of things; but first, it deepens the mounting focus towards gender diversity within the African startup funding landscape.
Secondly, it improves on the ongoing trends of investors preferring expat founders in the East African sub-region.
“The funding landscape in Kenya is generally biased towards male founders and in East Africa, especially to foreign founders,” said Abass.
“So it was a lot harder to get investors excited and onboard with us. For us, we’ve built something quite exciting, although it took some time. One key thing why we wanted to make this publicized is so other female founders can see that there’s an opportunity to do the same too,” she said.
But then the business model Abass and her team are pursuing seems to be the major deal breaker.
According to a McKinsey report comparing six insurance regions on the continent in 2018, Africa’s insurance sector has a penetration rate of 3%. If the South African sector is removed, the percentage declines to a pitiful 1.12%.
“The driving force for us was making insurance widely available. We felt that building the technological infrastructure to facilitate the distribution of insurance was the best way to increase the penetration level in Africa,” Abass said.
For Washington DC-based Accion Venture Lab, Lami’s insurance offers are quite attractive but its embedded finance feature is even the major bait.
“… By embedding customized insurance within businesses that customers know and trust, Lami is making insurance accessible for underserved populations in Africa and enabling them to build financial resilience,” said African director at Accion Venture Lab Ashley Lewis.
Perhaps the biggest conviction for the investors lies in the traction already generated by the startup since its inception.
Read also:Why South African Businesses Adopted Hybrid Cloud at Increasing Rate In 2020
The insurtech startup has sold over 5,000 policies since its inception. Britam, Pioneer, and Madison Insurance are among the more than 25 participating underwriters with which it has collaborated. More than 30 items, ranging from medical and employee benefits to motor and device insurance, are distributed by these underwriters.
One notable feature common to some of the investors in this round is that they — AAIC and Consonance — invest mostly in the African healthcare space.
With presence in Washington and Nairobi, The Continent Venture Partners participates in single and/or multiple rounds of early stage startups.
Acuity Ventures is a Silicon Valley-based family of venture capital funds that provides investment capital and strategic guidance to early stage startups.
Asia Africa Investment & Consulting (AAIC) is a dedicated Singaporean fund manager, investing mostly in healthcare startups.
For its part, investor Consonance Investment Managers has been very active on the African startup scene. Headquatered in Mauritius, but operating from Lagos, its notable investments include its $2 million co-investment in Ethiopian edtech startup Gebeya; its $1 million participation in the Nigerian healthtech company Lifestore in February this year; its co-funding in another Nigerian startup VerifyMe. Other notable startups on its portfolio include MDaas Global; She Leads Africa; Curacel, among others.
Based in New York, P1 Ventures has actively been investing in the African startup space, investing notably in Kenyan HR startup WorkPay, Nigeria’s OnePipe, among others.
Future Africa is a community investment platform run by a Nigerian serial entrepreneur and co-founder of Andela and Flutterwave, Iyin Aboyeji.
A Look At What The Startup Does
Founded in 2018, Lami seeks to democratize insurance products in Kenya, and Africa as a whole.
The startup enables companies such as banks, startups, and associations to sell digital insurance products to their customers through an API. Partner companies may also use the product to manage their own insurance needs.
Via its API, users can get a quote for motor, medical, or other customized insurance items. They may also personalize the benefits and tailor the premium to meet their needs, as well as obtain policy documents and claim information.
Claims are typically processed in about 90 days by the average African insurer. Lami has cut this down to a week, according to Abass, and it’s one of the ways the three-year-old company has built consumer confidence.
But most importantly, Lami co-designs products with its underwriting partners to tap into Kenya’s challenging insurance market. And approaching design in this way allows companies to provide their underlying customer base with exclusive insurance products.
The startup’s API is used by some clients, such as Stanbic Bank in Kenya, to operate insurance operations; HR platform WorkPay, to make its insurance products accessible to companies that use its platform.
Lami is also launching an insurance marketplace on e-commerce site Jumia, with over 20 insurance writers.
Lami Kenya Lami 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