Tanul Mishra feels the next Unicorn may not be into trading Books, Burgers, Stocks, Industrial equipment, Education, Lingerie or Credit Cards. It could be "InsurTech".
Having experienced the importance of Insurance at the base-camp of Mount Everest, Tanul is convinced about InsurTech being an underpenetrated subject. Her moment of realization was a trekking experience where her blood oxygen levels plummeted to 83-84 after catching a virus. Immediate relocation to a hospital was necessary but hiring a helicopter was a costly proposition. An insurance that Tanul purchased ahead of the trip helped save her life and the bank trips.
After the near-miss at at the base-camp, Tanul felt enlightened about the importance of insurance. By 2019, she had already sold her first venture Eatelish, a food platform. Afthonia Labs, the incubator, the next venture, was built to help startup founders and anybody with an idea. These days, she has been helping startups of all kinds and sizes.
Sifydotcom caught up with Tanul to understand why InsurTech is a billion dollar proposition. And her conversations with startup founders. She also makes a humble request -- do reach out to the team if you've got a business idea.
What is Afthonia Labs?
We are a startup incubator focussed on fintech. We advise startups and founders on everything from getting the technology architecture to raising capital via our platform.
Tell us a bit about InsurTech and why the bullish sentiments?
I think the Insurance sector in India is where banking was several years ago. In fact, there's just two customer touch points -- one while buying insurance and second while claiming it. There is a wide gap in the customer lifecycle. In fact, the customer is literally on his own without a customer touch point through this cycle.
Does that mean we lack that X factor? How much of market have we tapped?
No. New age players have been doing some good work. For instance, the micro-insurance products offered by Toffee or the innovation done by BimaPe are some examples. In the case of Toffee, they offer microinsurance products at a cheap price. They insure spectacles and offer pet insurance too. But a country of over a billion needs more. I think we may have just tapped 5 percent of the insurance market in India.
Is that number owing to a regulatory shortfall?
No, not at all. The Insurance regulator in India is more nimble in keeping pace with the market than its counterparts. I see, US for example, more hard-coded in regulatory issues than India. Let me give you an example -- an IRDA approved product can be sold across the length and breadth of the country. In the US the policy is totally different. An insurance product approved for sale in Illinois would require a different approval for it to be sold in New York or other state.
You have interacted with 200 co-founders over the last 12 months. How many are from Insurance or related to InsurTech?
Just one. And, I am hoping that more Founders reach out to us with their inspiring ideas. See, Covid has been a great lesson for the insurance sector. Prior to the pandemic, Indians were never comfortable speaking about death or loss. The pandemic may have taught us to look in the face of an adversity which has resulted in many consumers adopting insurance and talking about it openly.
When you say approach your incubator, are you looking at a minimum criteria or some parameters for founders?
Not at all. Afthonia is happy to speak and support founders who approach us at the concept or idea. Of course, we have some in-house parameters to assess the idea. But, our selection criteria is not based on check boxes such as a prestigious school or pedigree or other background. I think the only three parameters that counts is founders should be comfortable with the uncomfortable because the startup journey is not a bed of roses. Secondly, the founder should be adaptable. Third, they should be open minded.
The onboarding process is a democratic process where we refine the founder's vision through our Flywheel. Flywheel is our process of conversations with the mentor panel and the team at Afthonia. Post this, there's due dilligence and we assign relevant mentors to help the startup's objective.
What is the typical incubation time like?
We onboard through the year and the typical incubation time could be 12-18 months excluding the time the startup reaches out to us. The onboarding is a one-on-one program with mentors and the founding teams. During this time, we help the startups raise funds and generate successful Go to market strategies.
After the Zomato IPO, I am curious to ask are startups still being valued just on valuation metrics or have things changed?
Valuation is always revered and I dont blame the founders or VCs for it. In fact, it is the first question anyone asks. But we see conversations changing. Many of the startups and interactions I have had, I have found the conversations open to working with newer metrics such as unit profitability, profitability vis-a-vis cost, building efficiency etc.
Since all of this is free for the startup or a founder, how does Afthonia keep itself afloat?
Apart from equity in the startup venture we have other plans to bring revenues onto our platform. Ultimately, we have to be profitable. Having said that, there has been interest from corporates across the world in our corporate innovation programs. We are looking at building such programs with global partners focused on Indian startups.
Speaking of Indian startups, do you think we have sufficient incubators and does India Inc engage sufficiently with its startups?
We certainly need more incubators. India is among the top 3 startup destinations of the world but we have just 500 incubators and accelerators. Compare that to a developed or a mature ecosystem like US or China; they have 2500+ incubators and accelerators.
Of course each of these destinations could be different in its approach. For instance, in UK there are counties where the government is funding money to help startups while in the US there are more incubators spread through sectors and practices.
As regards engagement from India Inc, I feel there is constant evolution. The incubator, the startup and the enterprise are all here to improve and fulfill agreed objectives. Of course, there is no set formula and if it were, then the startup system in India would not be as fluid as it is.
For an incubator or accelerator it is important that they act as the vital bridge between the incumbent and newer technologies. For example, when we built a partnership with Yes Bank we would have conversations every week with the bank and the startup to see innovations and how they could be accelerated to the next level. Accelerators like us are a bridge for a startup. We not only hand-hold them but also provide them with insights on the technology changes and industry demands.