British startup Marshmallow has exploded over the years by using data science innovations to build auto insurance for immigrants and other consumers who have been overlooked or taken prices from traditional insurance. Currently, 1 million drivers are insured and have a profitable annual revenue of $500 million, with Marshmallow raising a new $90 million to expand.
Marshmallow plans to use this fund to move into financial services, and despite the calm impact of Brexit, there are more insurance products growing that they hope to appeal to people.
“We see migration as a great opportunity,” CEO Oliver Kent Braham said in an interview. He pointed out that in the UK, there are more people coming out of the workforce than there are 1.2 million migrants recorded in the UK in 2024 alone. “We need a transition to get more people to work. We want to help people move and integrate into the UK.”
In Marshmallow’s view, the integration comes with the ability to drive your own insurance vehicle, and soon the startup will buy hope, buy home insurance and take away the loan.
Marshmallow is set to launch its first loan product later this year, Kent-Braham said on the way to build a “one-stop shop” for all the finance and insurance that new arrivals to the UK may need to adapt to life.
According to Kent-Braham, the round is split between equities and debt, coming at a valuation of just over $2 billion. To put that into context, Marshmallow last raised $1.25 billion in 2021.
Startups have experienced significant business growth at the time. In 2021, Marshmallow guaranteed just 100,000 people. Currently, cities like London have 1 million insured numbers intensively with pink outdoor advertising campaigns that are hard to overlook.
Portage Capital leads the round with participation from BlackRock and Columbia Lake Partners. Previous backers of the company include Passion Capital, Investec and Scor. Marshmallow has raised approximately $220 million so far.
In particular, the new round has been in work since at least January, with Kent Braham noting that some of the equity is a convertible debt in 2023.
Marshmallow’s funds are coming at a complicated moment for European insurance startups.
On one hand there is Wefox’s harsh story.
Supported by SoftBank, Omers, Salesforce and dozens of others, Wefox’s valuation had risen to $4.5 billion by 2023. Just two years later, Wefox declined during a difficult time after years of losses and complications in a distributed/broker-based business model. The company has sold a portion of its business and has acquired floating lifeline funding.
But there are also some bright indications of Insurtech startups building a more sustainable business. And those who can demonstrate a powerful technology story are attracting attention from investors.
Last week, Ominimo, a new startup from Poland, won a major strategic investor with $10 million at a valuation of over $200 million. It was the first time Ominimo had raised money outside after growing profitability during bootstrapping. Like Marshmallow, startups start with car insurance, rethink actuarial formulas, and use AI to make new intrusions into risk forecasting.
Data science and AI are quickly becoming table stakes for insurance startups, but other details about marshmallows set them apart from Pack and larger competitors (such as the price-crushing mega-retail Tesco).
The ideas of inclusion and diversity that underpin how marshmallows are approaching their target customer base run deep in the startup.
Kent Braham co-founded with London-based Marshmallow twins, Alexander and David Goate. The twins really look similar. “You might actually be talking to Alexander now!” Oliver joked when he spoke for the story. But even more seriously, this startup is a rarity that is also underrated in other ways.
This is one of the things that appear to be only two British “unicorn” startups from black founders, and the other is World Reammit. Statistics are not so encouraged outside of the UK. A 2024 survey found that only 3% of startups valued over $1 billion have black founders across the UK and the US.
It is worth noting that when diversity, equity and inclusive programs are being demolished in the United States, marshmallow investors are looking at a precisely specific strength for their diverse leadership.
“It’s a very strong founding team,” said Devon Kirk, GP and co-head of Portage Capital Solutions, in an interview. “We believe that financial services will benefit from a variety of perspectives and leaders who have come up with innovative solutions to address these needs.”