- Investment sought:
- Discount offered:
Learn more about convertible campaigns.
Insurance is a great idea, but it hasn’t kept pace with society.
Wrisk is giving it a long overdue digital upgrade. Manage different types of insurance seamlessly through a single app. Understand how you are priced and what you can do to reduce your risk. Wrisk is insurance for the connected generation.
Following the national roll-out of Wrisk’s contents proposition later this year, we intend to expand our service to cater for other insurance needs, bringing everything together into one simple plan that grows with our customers.
Wrisk is about more than just buying insurance – it’s about managing and understanding your risk. Developed using advanced data science and actuarial techniques, our unique Wrisk Score is like a credit score for personal risk, enabling better, more transparent pricing.
Wrisk is also changing the way people pay for insurance by using top-up and balance. Our perpetual policy, billed monthly (like Netflix), allows customers to change or cancel without penalty.
This investment round is being raised by way of a convertible equity investment structure.
The key terms that apply to the Wrisk convertible are as follows:
• Discount – conversion at a 20% discount to the valuation set by a Trigger Event.
• Valuation cap of £15,000,000
• Conversion is triggered by ("Trigger Events"):
o An Equity Fundraise – defined as the Company raising investment capital of at least £1,000,000 from one transaction or a series of transactions, in exchange for the company issuing of Ordinary Shares;
o A Change of Control of the company (transfer of more than 50% of the share capital); or
o An IPO – being a listing of the company’s shares on a recognised stock market or secondary market.
• Longstop Date is the 15th March 2019.
• If conversion has not been triggered by the longstop date shares will be issued on the longstop date at a valuation based on the lower of:
(i) the lowest price of any Ordinary Share issued after the date of this Agreement; and
(ii) a pre-money company valuation of £8,643,976 on a fully diluted basis (this is based on the valuation of Wrisk's last funding round and approved EMI scheme).
The convertible would also convert to equity at this price in the event of winding up or liquidation of the company.
A whole generation seems to distrust insurance. But being uninsured leaves them vulnerable in emergencies:
• 61% of people who rent don’t buy insurance.
• 31% of millennials who travel never buy travel cover.
• 30% of millennials who drive are not the main policyholder.
It doesn’t have to be this way. Through challenger banks and budgeting apps, people are more ready to engage with financial services than ever – on their terms – if we make it easy and accessible. Strive to be ethical and fair. Build and maintain an open, responsive dialogue. Focus on people, not policies.
By engaging people through their phones and providing holistic cover, Wrisk will make it as effortless as possible, for as many as possible, to get the insurance they need, meaning fewer end up in long-term hardship when the worst happens. Beyond this, prioritising convenience and a fresh approach to transparency has the potential to engage brand new customers – kickstarting an entirely new mass market for insurance.
Substantial accomplishments to date
Operating in such a complex and highly regulated domain, launching our Beta and becoming “post-product” was a huge milestone for us. Early signs from our beta customers are encouraging...
Additionally, we have partnered with industry heavyweights Munich Re and Hiscox, and have commercial agreements in place with the likes of BMW, with whom we are due to deliver insurance for cars sold in the UK.
We have completed a significant number of milestones, which could not have been achieved without the dedication of an experienced team of insurance and technology professionals.
Wrisk will be an agency – acting on behalf of major insurance companies such as Munich Re and Hiscox – respected incumbents known to support innovation in their partners. The agency model, known as a Managing General Agent ('MGA'), is one that’s widely used in the insurance sector.
As with all MGAs, the insurance liabilities remain on the balance sheet of Wrisk’s insurance partners, and as such our own revenue will come from:.
1. Commission per transaction (15-25%), paid by our insurer partners.
2. Profit commission, calculated annually and paid by our insurer partners.
3. Licence fees for the use of Wrisk in those territories where an MGA model is not appropriate.
Beyond these traditional sources of revenue, our roadmap also includes exploring additional derivative sources, such as referral fees in respect to non-insurance products, and possibly even licensing the Wrisk Score as a proxy rating tool for insurers in countries where traditional rating data is more scarce.
Use of proceeds
Why we are raising on Seedrs now.
Things change… and so have we.
Led by Oxford Capital, Wrisk completed a £3M seed round last year to build a world-class team, committed to making insurance simple, transparent and personal. A further £600K from 500+ investors via Seedrs gave real validation of our concept.
Since then, we have achieved beyond our expectations, with positive feedback from paying customers, contact centre infrastructure and technology in place to support our phase 1 partnership with BMW and a signed non-binding MOU to expand that partnership.
Given we believe that we are on the cusp of significant growth, we’ve decided to delay Series A until Q1 2019, as we build customer proof points and contracted revenue. This requires us to raise bridge capital via convertible equity to support a team of up to 30 FTEs focused on delivering:
• Core enhancements based upon FCA sandbox learnings.
• Q3 App Store launch of contents proposition.
• Q3 Phase 1 of BMW partnership
• Q4 Beta version motor insurance within app
Please note that the company has 2 convertible loans outstanding.
• The first is a £750k convertible loan, the details of which are as follows:
- The loan accrues 5% interest per annum.
- £250k including accrued interest will convert to ordinary shares at a 20% discount to the pre-money valuation set by the 1st Seedrs crowdfunding round (£1.95).
- £500k including accrued interest will convert to ordinary shares at a 20% discount to the pre-money valuation set by a fundraise of at least £1m at a valuation greater than £9m.
This fundraise will not trigger conversion.
- Long Stop Date: 31st December 2019.
- If the convertible is not triggered before the Long Stop Date the investor can decide to either convert the convertible at a 20% discount to the valuation set by an independent valuation advisory firm, or elect to redeem the loan at the nominal amount of the loan outstanding.
• The second is a £192,000 convertible loan, the details of which are as follows:
- The loan is interest free.
- After the 1st January 2019, the Company can request for the loan to be fully paid up or converted to Ordinary shares at the subscription price of the next equity fundraise.
The conversion of these loans will lead to investor dilution.
Please also note that certain investors in the company have A Preference Shares. The A Preference Holders can elect to receive a preferential return on a distribution of capital up to the value of their investment or can participate in the distribution of capital on a pro rata basis (a non-participating preference). The total invested in the A Preference Shares is £1,650,000.
Wrisk’s initial contents proposition will target people in their mid-twenties, a few years into their career (HENRYs – High Earner-Not-Rich-Yet). They will likely live in a house/flatshare in an urban centre with other professionals and will expect seamless digital experiences from the companies with which they engage.
Our ideal Wrisk customer is in the 'connected generation' (Gen-C) – someone who communicates, builds relationships and makes buying decisions online. They are happy to share information online if they trust the recipient and see that there is a fair value exchange. They prize integrity, honesty and transparency, and want to know the people behind any product they use.
They will buy into the company’s brand and values, and as the company grows they will take up new services offered, encouraging their friends and partners to do the same. Insurance will go from being a grudge purchase or luxury spend to being just a natural and obvious part of their personal finances.
Characteristics of target market
Wrisk underwent a market sizing exercise with KPMG in 2016, looking only at the UK premium for contents, our first product:
If you overlay onto these figures the fact that 61% of private tenants in the UK currently don't buy contents insurance, then the figures above understate the potential market size for our contents product considerably. We intend to create a new mass-market of those currently uninsured in the private rental market – due to expand to almost 5.8 million homes by 2021.
At present, many buy the cheapest insurance possible through comparison websites. Without strong loyalty, customers switch easily between insurance companies, led by price and with little understanding of other differences between products or providers.
Wrisk’s dialogue with its customers is totally different. Our beta customers are helping to demonstrate Wrisk is well placed to win customers who are motivated by user experience and customer service as well as price.
As a mass-market challenger brand, our go to market strategy is to turbocharge organic growth through B2B2C partnerships.
Over the medium-term, we intend to manage a portfolio of partnerships to amplify distribution. A number of companies have shown their willingness to work with us and signed Letters of Intent (LOIs).
Our first major partnership with BMW is in the final stages of contract negotiation. We expect that phase 1 will incorporate the migration of BMW’s UK insurance offering, which provides those who adopt free 7-day insurance cover to also take annual cover through Wrisk.
We’ve just signed a non-binding Memorandum of Understanding (MOU) to deliver further innovative programmes aimed at generating greater scale across the UK and internationally too.
Organic growth is underpinned by Wrisk’s holistic ‘one plan’ approach, which enables frictionless cross-sell and up-sell. Our balance and top-up feature allows us to offer incentives for loyalty and referral to encourage viral growth.
Our competitive landscape is divided into two: incumbent insurers and specialist insurtech startups.
Due to a high barrier to entry, incumbents have become accustomed to very little threat of change. Legacy systems and weak technical infrastructures limit their responsiveness. Most are large and by necessity, concerned about safeguarding the status quo than reinventing themselves.
Given the size of the prize, we feel that the insurtech startup landscape is unsurprisingly busy. However, startups face specific challenges getting into insurance:.
1. Support from insurance company partners.
2. Investment for a product with a long lead time before launch.
3. FCA authorisation.
4. Top-class tech talent into the insurance sector.
Many hone in on narrow slices of the insurance value chain, in contrast to Wrisk's holistic approach. By offering such a differentiated service, we believe Wrisk will be able to take market share from incumbents and co-exist with specialist competitors.