Luge Capital Leads $5.35M Investment in Finaeo to ‘Transform’ Life Insurance Distribution


Don’t call it a series A. Montreal-based FinTech fund Luge Capital has announced its 4th investment in just over 9 months since the company was founded. This time around they are partnering with Finaeo, a Toronto InsurTech that’s dreaming big. This “seed +” or “seed extension” round was led by Luge and supported by RGAX, Rising Tide Ventures, inovia capital and contingent of angel investors. The investment also included participation from all previous major investors.

“We’re dealing with an entire industry shifting to digital at the same time for the first time in history and that timing element can’t be overstated” says Aly Dhalla, CEO and Co-Founder of Finaeo. “There were 3 insights that launched Finaeo. One was the rise of the robo, the trend of FinTech companies saying ‘you don’t need an advisor, you don’t need any support.’ We feel like the world is more what we call ‘bionic’, combining great technology with a human touch to give great customer experience. Second, the fact that insurance as an industry is the last in the financial services sector to be digitized. This means a great opportunity to move people off pen and paper. And last is the rise of innovative business models, making it easier to launch into a traditional industry like insurance.”

For insurance advisors, the product is meant to be like an operating system on which they can run their business. However it is free for them. Instead, Finaeo’s revenue comes from a per transaction fee when insurance is bought and sold over their platform. It also makes the consolidation of systems possible, meaning the data does not have to be manually entered in multiple systems. This eliminates human error and saves quite a bit of time for all parties. Furthermore, advisors will have the flexibility to give customers advice on different types of products. They will also be able to give clients the buying experience they prefer, be it a hi-touch and educational level of service or 1-click access to a self-serve marketplace.

From an insurer’s perspective, it is designed to help solve 3 key problems that life insurance providers are experiencing on a global scale. The first is generating a compliant e-application quickly, easily and at a low cost. The second is dealing with underwriting questions in real time. And lastly, the actual transformation of existing legacy systems into something more modern which is able to mine data and provide valuable insights. Finaeo was designed to tackle all 3 of these challenges from a technology standpoint. The company claims this value proposition has been well received by the life insurance industry, and they are moving towards integrations later this year on both sides of the border.

Finaeo even has goodies for the actual human customers in all of this, providing real time transparency into the status of various processes. For example, if a policy approval is dependant on the results of a blood test, the individual in question can track the approvals process online and in real time and know when they can expect news regarding their policy.

“When we look at this kind of a business, we really look for 3 attributes. First, you have to believe in the strengths of the founders” says Karim Gillani, General Partner at Luge Capital. “The next thing we look at is whether they are solving a massive problem and do they have potential for world domination. And the last thing is timing… Is this solution timed properly to be adopted by the market? And we think with Finaeo we’ve got a hattrick.”

Dhalla reiterated that there was mutual interest all along in working with the Luge team telling MTLinTech that access to their network was only a part of what they found attractive here. “Karim has true operational and entrepreneurial experience. I think that as a founder, you’re looking for a couple of different types of venture capitalists to join your board. Right now we’re going through a growth phase where we’re going to experience things as a company that only another operator can empathize with. And so I wanted a lead investor who I respected as an operator first and as a capitalist second.”

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