U.K. startup Marshmallow has experienced significant growth over the years by leveraging innovations in data science to create car insurance policies tailored for immigrants and other consumers who have traditionally been overlooked or priced out by conventional insurance providers. Currently, with one million drivers insured and achieving a profitable annual revenue run rate of $500 million, Marshmallow has secured an additional $90 million in funding to support its expansion efforts.
The company plans to utilize the new funding to venture into financial services and introduce more insurance products aimed at appealing to a growing population, notwithstanding the challenging effects of Brexit. CEO Oliver Kent-Braham highlighted migration as a substantial opportunity, noting that the U.K. has more people leaving the workforce than entering, with 1.2 million migrants arriving in the country in 2024 alone. Kent-Braham emphasized the importance of migration for workforce replenishment and expressed Marshmallow’s intent to assist people in moving and integrating into the U.K.
Marshmallow envisions this integration as beginning with being able to drive an insured vehicle, with plans to soon expand offerings to include home insurance and loans. The startup anticipates launching its first lending product later this year, aiming to establish a comprehensive financial and insurance hub for new arrivals to the U.K.
The latest funding round is approximately split between equity and debt, according to Kent-Braham, with the valuation now surpassing $2 billion, compared to $1.25 billion in 2021. Marshmallow’s growth trajectory has been notable as the number of insured individuals rose from 100,000 in 2021 to one million, supported by a prominent advertising campaign in cities like London.
Portage Capital leads the new funding round, with participation from BlackRock and Columbia Lake Partners. Previous investors include Passion Capital, Investec, and Scor. To date, Marshmallow has raised approximately $220 million. The latest round had been under discussion since at least January, with part of the equity being a convertible debt raised in 2023.
This funding comes at a complex time for insurance startups in Europe. On one hand, WeFox, backed by SoftBank, Omers, and Salesforce, reached a valuation of $4.5 billion by 2023 but faced difficulties due to losses and complications in its business model, leading to asset sales and emergency financing to remain viable.
Conversely, there are positive signs of insurtech companies establishing more sustainable models, with clear technology narratives attracting investors. For instance, Ominimo, a new Polish startup, recently secured $10 million from a strategic investor at a valuation exceeding $200 million, marking its first external funding after achieving profitability.
While data science and AI are essential for insurance startups, Marshmallow distinguishes itself through its approach to inclusivity and diversity, which are central to its business strategy. Co-founded by Oliver and his identical twin, Alexander Kent-Braham, along with David Goaté, the startup is among the few U.K. unicorns founded by a Black entrepreneur, the other being WorldRemit.
Amid a period where diversity, equity, and inclusion programs are being dismantled in the U.S., Marshmallow’s investors consider its diverse leadership a particular strength. Devon Kirk, GP and co-head of Portage Capital Solutions, stated that the founding team is robust, noting that financial services benefit from diverse perspectives and leaders proposing innovative solutions to meet evolving needs.
