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Bitesize InsurTech: AXA

Users of Twitter will be aware that AXA is an active and prominent participant in the InsurTech scene – its AXA Strategic Ventures team frequently tweet all things innovation and startups.  But AXA Strategic Ventures is just one of several teams helping AXA stay ahead of the competition and new entrants.  As Sebastien Loubry, Partner at AXA Strategic Ventures, says, the group is aware that there is no “magic solution” for innovation so they need to try to “capture it everywhere”.

In this Bitesize profile we cover two of the teams that AXA has launched.

AXA Strategic Ventures (link)

AXA Strategic Ventures is a $275m venture capital fund in its second year of operation.  According to Sebastien, it is more traditional VC than corporate VC.  By this he means that the primary objective of the fund is to make a financial return; the secondary objective is the connection to the core business.  The investment decision is taken purely on the merits of the business.

That said, Sebastien points out that each portfolio investment is “connected to” the AXA world by the investment team.  This includes introductions to decision makers, mentoring and expertise.  Of the 28 companies currently in its portfolio, 5-10 are in “close discussions” with AXA.

The investment scope is any technology that could change insurance or asset management.  Technology themes therefore include enterprise software, FinTech, consumer and digital health.

The fund started with early stage investments but is now moving into growth equity.  One Inc is its first such investment – a California-based insurance policy admin platform.  (Selecting a policy admin system?  See the Oxbow Partners vendor selection checklist here.)

Asked whether the fund is an offensive move to exploit opportunities or a defensive move to protect against possible industry disruption, Sebastien describes the strategy as “definitely offensive”.  He also describes it as “anticipatory” – ensuring that AXA is aware of and involved in any tech-driven changes that occur in the industry.

The business is currently located in Paris, New York City, London and San Francisco, and a Hong Kong office is being opened shortly.  A $150m fund of funds product is being launched at the same time.

Kamet (link)

Kamet was launched in September 2015 and builds new businesses in a “startup studio”.  In the words of the business, Kamet “combines the power of a startup environment with privileged access to capital, knowledge and AXA assets”.  It has a €100m seed investment from AXA.

The difference between AXA Strategic Ventures and Kamet is that the former funds existing startups whereas the latter develops ideas and builds these into businesses.  As one could imagine, there are Chinese Walls between Strategic Ventures and Kamet.

The team is located in Paris, London and Tel Aviv.

Examples of previous launches are Padoa in France and Fixter in the UK.  Padoa is “reinventing occupational health” and raised a €6m Series A round last month.  Fixter is a business that makes car servicing easier by collecting cars rather than making the owner drop them off.

The Oxbow Partners view

You can’t fault AXA’s ambition and commitment.  This is a company with huge resources making a very serious play in the innovation and tech space.  With 28 companies in its VC portfolio and four businesses launched by Kamet, there is clearly traction and only time will tell if they have made the right bets.

There are perhaps two noteworthy points, and they both relate to AXA’s ability to use innovation and technology to enhance its own business.

First, it is interesting that only 5-10 businesses are currently in “close discussions” with AXA’s core business.  A cursory review of the AXA Strategic Ventures portfolio would suggest more than 10 businesses for which there should be an insurance or asset management angle.  If AXA isn’t going to partner with or otherwise use these businesses, who is?  It points to the challenges that established insurers and brokers have actually partnering with startups – something we wrote about last week (and proposed two alternative models).

Second, it is interesting that Kamet’s four (disclosed – there may be more) businesses are all “front end” propositions (as opposed to B2B technologies).  We’re surprised by this: there doesn’t seem to be any shortage of ideas in the startup environment, and we would have thought that AXA’s true differentiation would have been in spotting esoteric B2B problems that technology could solve.  Again, this could point to the difficulties that innovation teams and startups at most companies we see face when trying to interact with the core business.

 

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Chris Sandilands

Partner at Oxbow Partners
Chris Sandilands is a Partner at Oxbow Partners. Chris advises (re)insurers and brokers on a range of strategy topics and M&A. Chris started his career as a D&O underwriter at Munich Re, before joining Oliver Wyman, the consulting firm. He left to set up an online startup, before moving back into consulting, initially as an independent and then joining Oxbow Partners. You can reach him at csandilands@oxbowpartners.co.uk.
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