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Founder story: from 0 to 100K policy holders - how we raised 60M$ during Covid?

We started Luko with a simple statement and idea: we can use artificial intelligence to give people access to data about their home, thus making homes a healthier and more secure place.

What could be the worse idea when launching a startup? Probably developing a hardware device. This is exactly what led Benoit and I to team up 4 years ago, working on devices analyzing home data to build safer and greener houses.

Little did I know back then that this would lead us to build the #1 new generation home insurance in Europe! As we just announced our Series B fundraising, I wanted to retrace the path we've gone so far and share our vision for the future of european homes.
The early team working on the very first devices back when Luko was only about smart sensors.

The very early stages of Luko 4 years ago. We stuck close to our mission.

The road to 100k insurees in 2 years

It all started from a simple wish: leverage AI to bring a positive change to the world. We decided to gather and analyse home data available to help people protect their home sweet home, and optimize their energy consumption.

It led us to partner with traditional home insurance companies: what more logical than an insurer equiping its customers, so that they could prevent damages from happening, and better understand how their household works? Unfortunately (or should I say thankfully?), we quickly understood how broken home insurance was: An Industry build around a conflict of Interest : the more claims are denied, the more money insurers make. This led to awful customer experience:

  • Unintelligible contracts and hidden exclusions
  • Sales trying to convince you to underwrite guarantees you don't need
  • Incredibly slow and complex claim management
We partnered with insurers for less than 1 year but one thing appeared to be clear: if we wanted to reinvent home services, we had to start by re-inventing insurance with a ethical business model and customer experience as single obsession.
Our launch homepage. A user centric home page with simple value proposition.
Our home page after 2 years and a rebranding.

So in 2018 we teamed up with the 2 largest re-insurers in the world (Munich Re & Swiss Re) to build a new insurance model:

  • An insurance without conflict of interest where money left over after claims goes to the NGO chosen by the insuree
  • Lighting fast and efficient claim processes
  • Based on prevention with smart devices to avoid damages

We faced many challenges. Building an operational claim management machine was one of them, as well as developing a very legit expertise network. But each of those helped us improve our services.

Bring trust back through a new insurance business model

First of all, we had to start afresh with a wholly reinvented model. While working with traditional insurance companies, we realized that people tend to mistrust their insurance. So we had to tackle this problem first and we decided to set up the Giveback. When the insuree pays its premium, we take 30% to cover our fees, and 70% is pooled with other premiums to insure we can refund them if they ever file a claim. If there's money left at the end of the year, we don't put it in our pocket, we give it back to the charities chosen by our customers. By doing so, we can bring trust back between us and our insurees: they know we won't try to find excuses not to refund them, since we won't keep the money anyway.

Build operational excellence to serve user experience

When we launched, we wanted our website to reflect the simple user experience we had to offer. After getting our first insurees, we focused on delivering the same user experience when it came to claim management as when subscribing. During 2 years, our website did not change at all and we focused on scaling the best insurance service, providing the same quality service of service for 100 users than for 100k users.

Our early customer success team working hard to deliver the best experience and fastest answers.

We have to admit we made mistakes. It happened in some cases where we took way too long to close claims, and we sometimes failed to deliver this operational excellence we're aiming to. Nevertheless, we managed to repay most of those mistakes, keeping a remarkably high Net Promoter Score (NPS, for level of client satisfaction) despite managing always more claims.

The number of claims to manage also increased exponentially.

Filing a claim should be as simple as opening your app and answering a few questions.

This is how we fueled the Luko flying wheel: this strong customer experience helped spread the word of mouth around our first customers. This kept contributing to our high growth and is the reason why we have no sales force at Luko. We'd rather plough back money to improve our operational machine than sales representatives that will convince you to buy a product you don't need or that doesn't fit your needs.

The challenges left unfaced - but not for long

Despite that, we still have a long way to go to reach the moon.

  • We are still developing our smart sensors and we need to improve them before releasing them to thousands of European homes.
  • We intended to deploy Luko in Europe in 2020 but Covid-19 delayed our plans. European homes will have to wait until 2021.
  • Last but not least, we manage claims and refund our customers twice as fast as traditional insurers. But we still face delays when we need to fall back on partners experts networks. This ruins the user experience our customers deserve, hence we're actively working on creating our own experts network to provide faster and higher qualitative expertises.
The more we became client centric, the more customers joined Luko, reaching 100k active insurees only 2 years after our launch.

In the last 2 years we've been very obsessed by scaling and building the best home insurance in Europe. Without touching more of our broader vision: to provide a whole range of home services to help people live in greener and safer homes. Now is the time to implement those services and go beyond home insurance.

Be more than a home insurance provider: home care at heart

To be honest, 2020 has been a very intense year. Like roller coasters, Luko went through ups and downs, but we are thrilled to end this year on a very positive sign.

Raising 50M€ in 2 weeks during a lockdown

Given the successive lockdowns and the Covid context, Benoit and I took measures as entrepreneurs to help the company go through these times while keeping everyone on board. Those times were pretty uncertain, but we kept growing more and more. We had to continue hiring people to handle this exponential growth.

This gave us the acknowledgment that all the hard work and the effort we pulled meant something to customers that kept joining Luko, despite having other matters to deal with. Accordingly, we raised 50M€ in two weeks through zoom with EQT Ventures and other leading investors such as Orange Ventures. Top business angels joined the round from insurance, e-commerce, green tech and fintech industries such as Assaf Wand (CEO of Hippo Insurance), Robert Gentz (CEO of Zalando), Brent Hoberman (co-founder of lastminute.com and made.com), Rachel Delacour (CEO of Sweep), Thomas Plantenga (CEO of Vinted) with very useful insights and business learnings to share. Last but not least, our historic investors from previous rounds (Accel, SpeedInvest and Funders Fund) decided to invest again, proof or their confidence in our business model. And here we are, announcing this fundraise with the deck that allowed us to raise 50M€ within 2 weeks.

The next steps to bring peace of mind to all European homes

This will enable us to turn our ambition into reality, along with the 85 awesome Lukooms supporting our vision that joined the journey along the way. Luko started with a simple wish: make the world a better place by building safer and greener houses. On this journey, we decided to join the Bcorp community to assess our commitments, and keep attracting even more engaged and talented people. The Giveback is one of those commitments, and it also embodies a deep faith we have in the new business model we're shaping for insurance companies.

Building a company without trying to have a positive impact nowadays makes no sense. Money is not core and it shall be used to do good.

Having social and environmental engagements doesn't prevent firms to grow. The evidence of this lies in the fact that we're building the fastest growing insurtech in Europe while giving back to charities whenever we have the opportunity to do so.

In the end, I see one major difference between Luko in 4 years ago and Luko today: more than ever, we have the means to match our ambitions. We are building much more than an insurance provider, we are building a true home care provider which is absolutely unprecedented and truly exciting. Want a sneak peak of what to expect in 2021? We will offer new products and services, develop our home care offer, open Luko to a new country in Europe, and way more.

Entrepreneurs often tell how much their goals changed throughout their journey. At Luko, our mission has not changed from day 1. Is it boring? Maybe. Is it efficient? For sure.

We can't wait to deliver even more home care services, bring Luko to all European homes, and keep reinventing this industry as #1 proactive insurance in Europe.

Our remote team building day team picture during the last lockdown.

Want to join the journey? We are hiring in the following fields :

  • Tech & Data science
  • Claim managers
  • Repair network
By
Benoit et Raphaël
in
News
December 7, 2020

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