Digit, the Indian fintech start-up is aiming to settle its valuation at a mark of what will be $3.5 billion once it completes its latest round of funding. The Prem Watsa-backed insurance company is looking to raise a total of $200 million from Venture Capital titans Sequoia Capital India and Faering Capital Pvt amongst others as per reported by Bloomberg.
This will mark one of the largest funding rounds in the insurance start-up sector to date and has the company up against industry rivals like Amazon backed Acko.Digit. The start-up currently provides health insurance, commercial fire insurance as well as travel and auto insurance. This subsequent funding round would be a big jump from its previous valuation of $1.9 billion in January and it will be nearly doubling that amount in the near future. The funds raised by the company at the beginning of the year can be attributed to lead investors A91 Partners, Faering Capital, TVS Capital Funds. These investors were the reason behind Digit gaining its unicorn status in the start-up arena and also making it one of the first to attain the title in 2021.
This funding will also help boost the capital expenditure and help the company grow in the post-pandemic scenario. In the event of a potential third wave, these funds will act as a buffer.
The company was founded in 2017 by Kamesh Goyal and is backed by the Fairfax Group. It had since also raised money from two rounds of funding that was led by Canadian billionaire Prem Watsa and his Fairfax holdings. Additionally, and quite notably, one of Digit’s earliest backers in the industry was cricket captain and public figure Virat Kholi.
Digit Insurance recorded a profit of Rs 123 crore for COVID-19 year on the back of high sales of coronavirus-related health covers and motor insurances. The insurance premium collection also witnessed a 44 per cent jump to Rs 3,243 crore in FY21. Out of this, its health business premium rose 350 per cent to over Rs 240 crore in the year, news agency PTI reported. In 2020-21, its motor premium grew 28 per cent to Rs 2,433 crore, according to the report.
According to a report by Mint, motor insurance makes up the largest category of all the insurance premiums the company offers, as it brings in over 75 per cent of the gross premiums. Industrial fire and health insurance make up 20 per cent of the premiums. Travel insurance makes up the smallest aspect of the equation as it fell well below 0.5 per cent last year from the original 2 per cent, due to the impacts of lockdown and the pandemic.
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