The broker and insurance company Wefox has to save. A spokesman confirmed planned job cuts. It is about “less than ten percent” of the jobs. Wefox currently has around 1400 employees. The first 35 positions have already been named by management. “The mood is pretty bad,” said one employee.
The Wefox growth story has thus reached its first low point. But the company is not alone in this. Many start-ups in the financial sector are going through hard times: In view of rising interest rates, investors have not been so generous with the millions for a long time.
In this environment, the Wefox founders Julian Teicke and Fabian Wesemann are still doing well. Because they have enough money. Wefox was founded in Switzerland in November 2014 and was then called Financefox. The company has also been active in Germany since October 2015.
Wefox founder Julian Teicke
(Photo: Luca Fasching)
The start-up has received 1.33 billion dollars (1.21 billion euros) from investors so far. In July, the company announced its latest round of financing. In doing so, it secured a further $400 million, led by the sovereign wealth fund of the Emirate of Abu Dhabi, Mubadala Investment Company, which was already involved. Eurazeo, LGT, Horizons Ventures, Omers Ventures and Target Global also participated. At that time, the valuation of the start-up by investors increased from three billion dollars to 4.5 billion dollars.
The business concept hardly works
Wefox actually entered the market with the idea of finding revolutionary solutions for the technologically backward insurance market. But so far there has been little sign of that. According to co-founder Julian Teicke, the first sales from the company’s own insurance platform, in which the technology is being developed, will not come until 2024 and 2025. This is where the actual innovation should lie, with which Wefox wants to score and with which Teicke also emphasized in discussions with investors. He explained in 2016 that traditional insurers were unable to change quickly enough and to process the enormous increase in information. “They have an organizational form that is no longer created for today,” Teicke said at the time. Wefox can change that with its data technology.
The founders continue to rely on cooperation with traditional brokers, while other start-ups tried to take business from them via an Internet platform – which often failed. Wefox has the more successful approach here. But there is little to see of new technology so far.
The group currently consists of the small insurer Wefox Insurance in Liechtenstein, which had sales of EUR 50 million and a loss of EUR 22 million in 2021, as well as sales organizations including expensive brokers. Among other things, Wefox took over intermediary organizations in Switzerland and Italy, including the Italian intermediary Mansutti, which is particularly well-known in motor vehicle insurance. Most recently, the group bought Dutch intermediary TAF.
Insurance brokerage makes up the lion’s share of the approximately 600 million euros in sales. There is little to be seen of innovations: Wefox has taken over very traditional sales organizations and lives on the commissions that traditional insurers transfer to them.
Wefox is also feeling the growing demands of investors in start-ups. In addition, there is no exit scenario so far – the company seems to be a long way from an IPO. That’s why the Wefox founders are under pressure to deliver better numbers. For this reason, they have set the goal of breaking even by the end of 2023.
Teicke and Wesemann have the advantage of already having raised billions and a number of investors. This gives the company a clear advantage: Unlike many other young companies, Wefox is not dependent on two or three addresses.