Johannesburg, South Africa – June 7, 2018– Insurtech startup Lumkani announced today that it has closed a seed funding round to provide highly vulnerable, traditionally excluded, low-income consumers living in informal settlements with insurance coverage. 4Di Capital; Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion; and Lireas participated in this round. The funds will enable Lumkani to enhance and grow its product offerings, reach new communities throughout South Africa, and expand its team.
Founded in 2015, Lumkani addresses the challenge of fire safety in informal settlements through a combination of early-warning fire detection technology and financial services. Lumkani leverages proprietary hardware and a tech-enabled agent network to provide consumers living in informal settlements with insurance that protects against loss of life, shelter, and assets in the case of a home fire. Lumkani bundles this insurance product with an Internet of Things (IoT) connected heat sensor that detects fire in and around homes. Lumkani’s insurtech software generates data on household value, location, and demographics that Lumkani can use to underwrite, service, and pay out claims.
“At Lumkani, we are committed to providing South Africans living in informal settlements with access to financial services that have previously not been on the market. We look forward to working with our new partners 4Di Capital, Accion Venture Lab, and Lireas to strengthen our ability to reach even more underserved consumers,” said David Gluckman, Director of Lumkani.
Consumers living in informal communities experience high-density accommodation, lack of access to basic amenities, and are overexposed to fires and other disasters. Consumers in this market also face significant challenges in accessing basic financial services.
“At 4Di Capital, we are excited about the potential for new technology and new data sources to create inclusion for the millions of South Africans presently not able to access financial services, as they do not have a formal address, a credit history or a KYC record, and traditional financial and risk products are unsuitably designed. Lumkani’s approach enables this effectively and affordably, potentially creating a whole new class of financial services customers,” said Justin Stanford, partner at 4Di Capital.
“More than a billion people live in overcrowded informal settlements with the fear of fires and other catastrophic events. Lumkani’s innovative insurtech offering is helping this vulnerable population feel safe in their homes,” said Michael Schlein, President and CEO of Accion. “Lumkani is a great example of how the right combination of technology and direct client support – ‘tech’ and ‘touch’ – can make insurance more accessible and scalable,” added Amee Parbhoo, Director of Investments at Accion Venture Lab.
“Lumkani has a number of unique features which stood out for us as an investor – a terrific team, simple, yet effective technology, and a market-first insurance product. Above all this business has the potential to make a difference to the most vulnerable of society and at the same time save lives. With reinsurance support from Hannover Re and an excellent investor base, Lumkani is well-positioned to begin serving this underserved market,” said Valerie Hayter, Managing Director of Lireas.
In 2015, The Tech Awards awarded Lumkani’s IoT heat sensor the Katherine M. Swanson Young Innovator Award. To-date, Lumkani has distributed more than 17,000 IoT heat sensors, and in 2016 launched a complementary insurance product. It has expanded its offerings to over 30 communities throughout South Africa.
Lumkani is an Insurtech Startup that seeks to build resilience in under-served communities exposed to high levels of risk, using technology and financial services. Lumkani mitigates the loss of life and property caused by fires in informal settlements using specifically designed Internet of Things (IoT) heat sensors and insurance. The combination of technology and financial cover has enabled Lumkani to decrease the impact of fires in low-income neighbourhoods.
About 4Di Capital
4Di Capital is an independent venture capital firm based in South Africa’s “Silicon Cape”, specialising in high-growth technology venture opportunities, at the early- and growth-funding stages. The firm has offices in Cape Town, South Africa and Atlanta, Georgia, U.S.A., and counts among its funds investors Reinet Fund S.C.A., E. Oppenheimer & Sons, Convergence Partners and MMI Holdings. 4Di funds are managed by the GP partnership team of Anton van Vlaanderen, Douglas Cherry, Erik van Vlaanderen, Justin Stanford and Laurie Olivier. 4Di’s new Exponential Technology Fund invests in the FinTech, HealthTech and InsureTech sectors.
About Accion Venture Lab
Accion Venture Lab is the world’s leading seed-stage investor in fintech for the underserved. Venture Lab invests capital in, and provides support to, innovative fintech startups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Since launching in 2012, Venture Lab has deployed over US$10 million across more than 30 startups that work in over 20 countries worldwide. Venture Lab is a part of Accion, a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of – or poorly served by – the financial sector. For more than 50 years, Accion has helped tens of millions of people through its work with more than 90 partners in 40 countries. For further information, visithttps://www.accion.org/venturelab.
Lireas is the strategic Investment arm of Hannover Re Africa, a subsidiary of the 3rd largest reinsurer in the world. Mahogany Private Equity is a minority shareholder in Lireas and provides it with private equity and corporate finance expertise as well as BBBEE credentials. Lireas has a unique business model providing partners with access to finance, insurance licenses and reinsurance capacity. It is considered a pioneer of the underwriting agency concept in South Africa having been invested in this business model for over 30 years. More recently Lireas was mandated by its Board to venture into the world of insurtech and has made a number of investments to date. Lireas believes in investing in people rather than complex business plans and tries to balance the rigors of corporate governance with entrepreneurial flare, an ingredient critical to the success of all its businesses.
Katie Mounts (Accion)