KOBA INSURANCE
Australia’s only tech-enabled pay-per-km car insurance had investors jump to back its fair cost solution at a time when Aussies stayed home due to COVID, and looked to cut back on spiralling costs of living.
There’s a lot to be said for being first to market with a product innovation that saves Australians money on a grudge purchase. That’s exactly what Andrew Wong has managed to achieve when launching Koba Insurance in 2022.
He had three startup ideas in mind that he hoped to get off the ground, but it was his concept for pay-per kilometre insurance that gained traction in the market from the very beginning.
He’s got runs on the board, too. During his career, he’s established a design agency, a home delivery business that aggregates food distributors to online shopping when living in California and then another food distribution business based around carbon negative cattle ranging and distributing beef products around California and the rest of the US, before returning to Australia.
While the pay per kilometre car insurance offering exists all over the world, it didn’t yet exist in Australia, giving him the green light to race to market before the big insurance companies managed to figure out what he was up to.
Koba Insurance works by taking data generated through a car’s onboard computer that’s shared with the consumer to their phone and sharing that data with the insurance company to engage more with its customers and add more services to add value where things traditionally haven’t existed in this space, he says.
"It was an easy decision to raise through Birchal because instantly, we get customers and advocates for our product offering. You’re not only finding educated, sophisticated investors, you’re finding great customers as well."
ANDREW WONG - KOBA FOUNDER
Launching during the perfect storm
This insurance challenger brand launched into the perfect storm of conditions to make it a success. The pandemic meant less cars on the road, while the cost of living is forcing households to look at where they can cut costs.
His growth projections for the business are significant, too. Wong explains that right now, there are nearly one million cars connected to the internet in Australia, and this number will grow to an estimated 10 million by 2030. And just as the Buy Now Pay Later space has forced change in how consumers look at shopping, Koba Insurance is forcing drivers to reconsider the cost of their insurance policy.
So, with that many cars fitted with smart technology, he set out to make the way that these cars are insured smart, too.
It’s a concept that works particularly well for consumers with a second car that isn’t used regularly.
“You can actively choose not to use a product when you’re working from home, or catching the train. You can simply switch to a product that gives you a cheaper deal based on actual usage,” Wong says.
“Cost savings in the insurance space is huge. Everyone who has a car has to have insurance and it’s a grudge purchase for everyone. Consumers can see that this is something that they can genuinely control when it comes to cost,” Wong explains.
Saving on the drive
Given that so many Australians are looking at ways to cut costs amid the cost of living crisis impacting all facets of life, it’s hardly surprising that the business has found its feet in the local market.
Koba Insurance is underwritten by general insurer, Eric Insurance. Wong explains that the big insurance companies use aggregated data models to pigeonhole drivers. This means low risk drivers pay higher, more expensive premiums to subsidise high risk drivers.
In 2020 alone, this model meant that Australian insurance majors pocketed an extra $800 million in spite of our reduced mobility amid the pandemic.
“When you explain that this product is for people who don’t use their car very often and will save them money, it’s a concept that’s very easy to understand because it saves money,” he says.
It’s a model that has proven to have a growing market in Australia, with high engagement and high retention rates being reported by the brand. While there are other pay-per kilometre players in the market these days, Koba is the only tech-enabled player in the market that uses actual driver data.
For the first six months, Koba Insurance has grown about 50 per cent month-on-month. Last year, the challenger brand also launched Australia’s first and only comprehensive car sharing insurance product.
The insurance policy literally switches off and on whenever a shared car is utilised on a car-sharing platform.
Mid-way through 2022, Koba Insurance launched nationwide. And in June this year, it was made it in the top 50 Insurtechs in the region.
Raising with Birchal
When considering how to fund growth in his business, it didn’t take him long to settle upon equity crowdfunding as the ideal path to grow the startup.
Wong says: “It was an easy decision to raise through Birchal because instantly, we get customers and advocates for our product offering. We get access to people that actually care about what we’re offering and will use the offering right away. You’re not only finding educated, sophisticated investors, you’re finding great customers as well,” he says.
Koba has raised twice on Birchal. The first raise in August 2021 hit the max $1 million in five days, which led to the launch and rapid growth of its pay-per kilometre insurance company.
The second campaign, in September 2022, raised $692,914.20.
“There are about 14 million drivers in Australia and 20 million cars, so the growth milestones are huge and we’re disrupting an industry that has remained fairly static for decade,” Wong says.
He has a cashflow positive goal for the next 18 months based on revenue projections. “These investors understand that they’re not trying to put in $1 to take out $1 tomorrow. They understand that they’re putting in $1 so that they can take out $5 in three to five years. They understand that the right offer, the right product and the right business should still be able to raise in this tougher economic environment,” he says.
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Take the time to get it right
There have of course been challenges along the way. Insurance isn’t a sexy product. In fact, it’s a grudge purchase. “Getting people to understand where we fit in the market takes time and effort,” he says. He recommends that others contemplating an equity crowdfunding raise remember that they will need to build out an engagement model with investors, which takes time.
Talk with shareholders often
Make sure that any new product design updates are communicated with investors first, who give us their vote, and tell us what to do. They share new opportunities, and give us feedback on our product, he says. Managing investors and talking to them on a regular basis is one of the most powerful things that startups can do, he says. “We always stand by the belief that our consumers are the most important piece of the puzzle, and crowdfunding puts our customers at the heart of our business.”
Be prepared for success
“The reality is that equity crowdfunding is brilliant, but like everything, you need to work hard to make it happen. If it was easy, everyone would do it. You’ve got to be prepared to put in the work, do the marketing to create a product and an offer that is genuinely of interest to a retail investor,” Wong says.
Have the tough conversations
Wong adds: “The product has to be right for people to get excited about it, and you have to know your audience and understand the workload that you’re putting in. You’ve also got to be prepared to have hard conversations with investors.”
