If unicorn founders know how to spot opportunities, then what does it say about a startup when it’s backed by not one, not two, but seven unicorn founders? Yup, it might just be the investment opportunity of the year. Meet Justos, a Brazil-based insurtech player making the rounds among investment circles these days.
The startup recently raised a seed fund amounting to $2.8, with the round led by one of the largest VC firms in Latin America, Kaszek. Big Bets is also part of the funding round. Before we discuss the business model and traction of Justos, let’s take a look at its cap table and who are the unicorn founders who took a chance at it.
With Justos being in the auto insurance industry, it’s not surprising that three of its investors are founders of fintech startups. They are Assaf Wand (Hippo Insurance CEO and co-founder), David Vélez (Nubank founder and CEO), and Sergio Furio (Creditas founder and CEO).
Also on the cap table is Carlos Garcia. He is the founder and CEO of Kavak, an online platform for buying and selling second-hand cars. Kavak is fresh from raising a $1.15 billion valuation last year, making it the first Mexican tech unicorn. As Kavak’s business involves auto buy-and-sell, it’s not surprising that Garcia backed a startup with a related service.
Two C-level executives who invested in Justos are involved in non-fintech and non-auto ventures. They are Patrick Sigrist (iFood founder) and Fritz Lanman (ClassPass CEO). Aside from those mentioned, there’s another unicorn CEO who joined the cap table but wished to remain unnamed.
Also joining the seed round are executives from Stripe, Robinhood, Carta Wise, and Capital One.
Old Concept Applied to a New Market
So, what is Justos bringing to the table that made unicorn founders jump right in the seed round? Not as groundbreaking as one might think, apparently. Well, at least not for people in the U.S. who are familiar with the concept of using driver data to set auto insurance costs.
This process, however, is something new to the Brazilian market. That being said, it could be a game-changing venture in Brazil, offering a chance to get fair prices for safe drivers.
Just like seven of their investors, the trio behind Justos is aiming to be unicorn founders themselves. They are Jorge Soto Moreno, Dhaval Chadha, and Antonio Molins. They’ve previously worked in Silicon Valley-based companies, including ClassPass (hence, the investment), Netflix, and Airbnb.
Chadha said he and his two co-founders have always thought about building a venture in Latin America. They’ve already talked to investors in the U.S., Mexico, and Brazil when they decided to build an insurtech startup. With the venture, Chadha says they aim to help modernize the auto sector.
But why dabble in insurance? Possibly because there’s a huge opportunity in it. After all, seven out of ten cars in Brazil are not insured. Because of the present situation, an insurtech that offers fair rates has a great market to tap and Justos is up for the challenge.
Justos: Using Tech for Auto Insurance
So the startup aims to provide insurance based on a driver’s data – we get the insurance part. But where does the “tech” component fit in? Akin to Root in the U.S., the Brazil-based startup aims to collect driver’s data through their smartphone. By doing so, the system gets more accurate data that informs premium rates depending on risk types.
According to Chadha, the startup intends to measure how safely a person drives based on smartphone sensors. If data shows a person drives well, they have a chance to get cheaper insurance compared to old-school models.
The startup is also looking at using computerized vision and AI down the road. These techs could help analyze data better, and process claims quicker. In an interview with TechCrunch, Chadha says they aim to disrupt the industry in Brazil, similar to what Nubank did with banking. When you look at it like that, it’s easy to surmise why Nubank chief David Vélez joined the cap table.
Justos also plans to distribute its services through other channels. These include brokers and banks. But perhaps more importantly, they also plan to offer their products directly to users through their website, app, and WhatsApp. And with clients signing up to a waitlist, the startup aims to roll out its policies before the year ends.
