InsurTech startup Laka has raised $4.7 million in a seed round led by LocalGlobe and Creandum, with support from several angel investors.

The London-based firm focuses on the cycling market, with a product insuring bicycles and cycling equipment against theft or damage now used by around 5,000 people across the UK.

Unlike traditional insurance, where profit is accumulated by settling as few claims as possible, Laka’s community model ensures everyone is fairly covered by sharing the cost of claims.

Each member’s monthly contribution is capped in proportion to the value of their insured equipment, protecting individuals in case there’s a high claim volume during a certain month. The company has reported that 80 per cent of customer payment goes to help fellow members who have damaged or lost their bike, with the remaining 20 per cent covering operational costs.

Launched in January 2018, Laka raised pre-seed funding that June, with this new round bringing the total to $6.4 million.

It has plans to launch in the Netherlands soon, before a winder roll-out across Europe. Laka also aims to add personal accident coverage, which would focus on medical support for injuries; and eventually there are plans to insure other sports.

Chief executive Tobi Taupitz commented: “Ideally suited to high frequency and low severity forms of insurance, our ultimate ambition is to roll out Laka insurance products for a range of different purposes.

“From covering the equipment of the 138 million outdoor sports enthusiasts across Europe, to personal accident cover and beyond, our mission to create a community driven, transparent approach to insurance has only just begun.”

Remus Brett, a partner at LocalGlobe, commented: “The beauty of Laka is it returns insurance to its pure, mutual heritage.

“These principles are over 300 years old, the difference being technology and increasing consumer awareness that traditional insurance models, with complex clauses, excesses and a painful claims process, are fundamentally broken.”

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