General Atlantic wants to increase stake in Amazon-backed insurtech Acko • businesskinda.com

General Atlantic is in talks to invest about $50 million in Acko, two sources familiar with the matter told businesskinda.com, doubling their bet on Indian insurtech at a time when most investors are cautiously entering investment opportunities.

The New York-based growth equity investor is positioning itself to lead a new funding round of about $100 million in the Indian startup, the sources said, asking for anonymity as the details are private. The new round — funded almost entirely by existing lenders — is likely to continue at a near-flat valuation of $1.2 billion to $1.25 billion, one of the sources said.

The investment is not yet finalized, so the terms of the deal may change, the sources warned. Acko, which turned a unicorn last year after securing a financing round led by General Atlantic, and the investment company declined to comment Wednesday.

The new deliberations follow Acko meeting with PayU earlier this year to raise a round of more than $200 million at a valuation of $1.8 billion, one of the sources said. It is not clear why those talks did not go through. Indian newspaper Economic Times reported last month that PayU had offered Acko a term sheet.

Acko — which counts Lightspeed Venture Partners India, CPPIB, Amazon and Multiples Private Equity among its existing lenders — is one of a handful of startups trying to tackle the country’s aging insurance sector with a digital-first product. It develops and sells bite-sized auto insurance products (aimed at drivers and others in transportation-related scenarios), healthcare protections to employers, as well as gadget protection.

The startup has distribution partners with a number of companies, including Amazon, an existing investor in Acko, as well as travel and hotel booking platform MakeMyTrip, ride-hailing firm Ola, insurance giant Bajaj Finance and Urban Company.

Acko said last year it covers nearly a million gig workers in the country through partnerships with companies, including food delivery giants Swiggy and Zomato.

Offering a large catalog of bite-sized insurance policies is crucial for businesses in India. Only a fraction of the country’s 1.3 billion people currently have access to insurance, and most cannot afford large policies. According to ICRA rating agency, insurance products had reached less than 3% of the population in 2017. An average Indian earns about $2,100 per year, according to the World Bank. ICRA estimated that of those Indians who bought an insurance product, they spent less than $50 on it in 2017.

The new funding deliberations come at a time when deal flow activity has taken a heavy blow in the South Asian market as investors become cautious about writing new checks and evaluating their underwriting models after valuations of publicly traded companies plummet.

Indian startups raised $3 billion in the quarter ended September, down 57% from the previous quarter and 80% year-over-year, according to market intelligence platform Tracxn.