- Paris-based insurance startup Descartes Underwriting has raised an $18.5 million funding round led by Cathay Innovation.
- The French company specializes in climate change-related insurance.
- Founded in 2018, the company will use the fresh funding to expand into the US and Asia.
- “The fundraising was a very efficient process because of the strength of our business model even as some clients were forced to reduce their insurance budget,” Descartes Underwriting CEO and cofounder Tanguy Touffut said.
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Paris-based insurance startup Descartes Underwriting has closed an $18.5 million Series A funding round from VC funds Cathay Innovation and Serena.
The company has seen a boom in activity during the coronavirus pandemic as multinationals and governments worldwide look to find solutions to previously unprecedented events.
Descartes, founded in 2018, specializes in climate change-related insurance protections, specifically parametric insurance, which covers the probability of a predefined event happening instead of indemnifying actual loss incurred. It’s traditionally found in sectors like agriculture and energy where extreme-weather events are increasingly frequent but is moving beyond these, according to Descartes cofounder and CEO Tanguy Touffut.
“We need to strengthen the reputation of the insurance sector and provide more transparency and innovative cover,” he said. “Parametric cover is something that is gaining momentum worldwide in new sectors outside of energy and agriculture.”
The company believes that its offering is differentiated enough to attract leading companies and claims to have signed up Fortune 500 companies and some governments to its products.
“We’ve been looking at how climate change is impacting business and didn’t see the tech or experience to become a relevant player in the insurance space until we came across Descartes,” Jacky Abitbol, partner at Cathay Innovation said. “Big corporates have been insuring against climate change already but Descartes provides more transparency and the terms are clear, meaning payments can be triggered instantly.”
Descartes closed the funding with its new investors following a $2.5 million seed round from BlackFin Capital Partners 18 months ago.
“The fundraising was a very efficient process because of the strength of our business model even as some clients were forced to reduce their insurance budget,” Touffut said.
The company plans to use the funding to expand its products into the US and Asian markets and will open offices in New York and Singapore.
Specifically, the increased frequency of tornadoes in the continental US is an area of focus, as is the strength of storm surges that hit nearby states where the severe weather doesn’t make landfall.
Similarly, the company will continue to invest in R&D around COVID-19 to build out specific solutions in the event of a second wave.
Check out Descartes’ redacted pitch deck below: