Aofex

Jay Z and Will Smith-Backed Insurance Startup Ethos is Now Worth Nearly $500 Million

| Updated
by Tolu Ajiboye · 3 min read
Jay Z and Will Smith-Backed Insurance Startup Ethos is Now Worth Nearly $500 Million
Photo: Ethos Life

Through a new Series C funding round, American life insurance startup Ethos has successfully pulled in an additional $60 million investment, driving the company’s valuation all the to the neighborhood of $500 million.

The fresh funding of American life insurance startup Ethos was led by Alphabet’s venture division GV with backing from multinational investment bank Goldman Sachs.

Speaking on the prospects for the company, Ethos CEO and Co-Founder Peter Colis has hinted at the expansion of business, helping it reach and protect more lives. Colis said:

“We think of Ethos as what Northwestern Mutual has done for the past 100 years, Ethos is going to do for the next 150 years, protecting generations and generations of families to come.”

A collective of fintech startups are working hard to disrupt the status quo in the insurance market. As a part of them, Ethos is also looking to do as much of refurbishment as it can, to the current process and available methods of insurance.

For example, there currently are a lot of agents in the life insurance business who make a considerable amount of money as middlemen in the sector. A lot of the time, this is done at the detriment of the end customer who actually needs the policy so Ethos, by presenting itself with its unique procedures, hopes to change that. Collins explains that the current coverage gap is a little too wide as statistics have revealed that more than 40% of Americans have no life insurance coverage.

“It’s a structural issue where you have commissioned sales agents who are incentivized to sell you the largest most expensive policy to the family that can afford that expensive policy. So they’ll usually try to sell you an investment feature policy that isn’t necessarily right given your need [and] your ability to pay.”

Another way it hopes to overhaul the system is via technology. Currently, Ethos boasts of its application speed as it only requires about ten minutes to make said the application and secure approval for limited life insurance, significantly more affordable than the permanent one.

The company also does not mandate any medical assessment for approval. Instead, Ethos uses technology that analyses autonomously submitted data and makes certain predictions which can be easily verified. This speeds up the process, allowing prospective customers signup and receive life insurance all within a few minutes.

Last Funding Round Was Not Necessary

Ethos has not yet broken even and is yet to make any significant profits. Firms like this worry investors who are obviously in it for more than a few reasons include the opportunity to turn over a robust profit. Uber for example, is still struggling with pulling in profits even after a public listing.

WeWork, a firm which specializes in the provision of shared workspaces, is said to have already made a near $1 billion in 2019 alone. Regarding this, however, Colis said:

“We’re very different from Uber and WeWork. We still have the majority of capital raised from last round fundraising. This round was opportunistic rather than necessary [and was focused on] disrupting the life insurance industry and protecting families.”

Existing investors from previous funding rounds include Sequoia Capital, Accel, Will Smith, Jay Z, and Robert Downey Jr.

Business News, Editor's Choice, FinTech News, News
Tolu Ajiboye
Author Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

Related Articles