How Ankit Agrawal's cover drive sheltered InsuranceDekho in the funding winter

It was the worst funding February in four years, but InsuranceDekho's maiden raise of $150 million churned out the biggest Series A round in India. With another $60 million following briskly, Ankit Agrawal continued with his cover drive in 2023

By Rajiv Singh Forbes India Staff

Published: Jan 8, 2024 12:47:18 PM IST

Updated: Jan 16, 2024 05:02:08 PM IST

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Ankit Agrawal, Founder and CEO, InsuranceDekho Image: Madhu Kapparath

Gurugram, December 2022. The war room wore a sombre look. The signs were ominous. Over the last six months, the fertile terrains of growth got morphed into a treacherous battleground, there were confirmed reports of heavy casualties everywhere, and the tailwinds of 2021 transformed into fatal headwinds. The troops were quickly running out of ammunition. The morale was hitting a new low with every passing day, and the signs of fatigue were conspicuous on the dreary faces of the soldiers. The terrible thing, though, was that there were no comforting signs of things coming back to normal anytime soon. The worst part, however, was the fact that India had not witnessed, and was not prepared for, such a brutal and prolonged combat.

Meanwhile, inside the war room in Gurugram, the distressing signs were unnerving and visible. The three army generals—Ankit Agrawal, Puneet Kumar and Aman Batra (CEO, CFO and investor relations’ honcho, respectively)—found themselves huddled every morning, every week, for over six months. “It was one of the worst times to raise venture money,” confesses Agrawal, head of the pack and founder of InsuranceDekho, the insuretech company that was set up in 2016, got a broking licence from the regulator the next year, and rolled out operations from 2018. The rookie founder was alluding to a bitter funding winter, which started to set in around July last year.

In four months, by November 2022, the winter turned frosty. Look at the numbers. While in November 2021, startups in India raked in a staggering $4.33 billion in funding, the corresponding number for the next year dipped by over 67 percent to $1.3 billion. The greenhorn had got his assessment right. It was indeed a terrible time to raise money. But for a startup like InsuranceDekho, which was hitting the funding market after four years of being incubated by GirnarSoft—the parent company of CarDekho—the timing looked disastrous. The market had turned dodgy, funding was drying up at a disconcerting pace, and everybody—industry observers, experts and sceptics—was more than certain that InsuranceDekho would find zilch takers.

The gloomy prediction had one more crucial layer, which was highlighted by the naysayers. The fag end of the last year was also a time when many sealed deals—the term sheets were signed, diligence was completed, and the amount just had to be wired—didn’t fructify. “Almost every other day we used to hear the news that some or the other deal bombed,” recounts Agrawal. He himself was in touch with 15 funds, around half a dozen evinced interest and sent the term sheet, and the rest fell out of consideration because the founder didn’t find them valuable to steer the startup from “zero to IPO” stage. Last November, InsuranceDekho was in the midst of completing the funding paperwork, which was already getting dragged out by a few months because of the overseas presence of a bunch of potential backers in Europe and the US.

With every passing day, the fear of the unknown started to weigh heavily on the minds of the founder. Two months later—in January 2023—the documentation was still incomplete, regulatory approvals were yet to be in place, and the protracted delay (now the process was into the fifth month) pushed the rumour mills into overdrive. The fear of the unknown now looked like an imminent tragedy as the news of an impending and much-delayed fund raise was out in the public. “Everyone looks at you. And when things get delayed, people think something is either wrong with the company or there is no money left,” says Agrawal, who also had to ensure that employees and stakeholders didn’t press the panic button. Though Agrawal stayed unflustered, his cautious optimism had started to wear thin. The CFO tried to inject hope. “The process takes time. Things are under control. Trust your team,” underlined Kumar.

Batra nodded, and tried to put things in context. “Initially, we planned to raise $60 million, but we kept raising the bar and we are now working on a much bigger deal,” said the vice president (strategy and investor relations) of InsuranceDekho. “It might be taking more time than expected. But we have nothing to fear,” reckoned Kumar. The performers, he underlined, would eventually get rewarded.

Also read: Zepto: The unicorn in the grey (funding) winter sky

The startup, for sure, had notched up impressive numbers. It posted a tidy profit in FY19, and in FY22, the revenues were set to touch the ₹150 crore-mark from ₹10.8 crore in FY19. The loss, too, was not alarming. The startup was likely to close FY22 with a negative bottom line of over ₹70 crore. The founder knew that the fundamentals were in place because in the absence of funding, the startup had raised working capital from banks. “That’s how traditionally businesses used to run: Take money from banks and grow,” says Agrawal. That’s what InsuranceDekho did during the six months when the deal was getting stitched.

Then came February 2023, and InsuranceDekho scored a massive cover drive. The startup scooped up a staggering $150 million in Series A round of funding, which happened to be the biggest early-stage funding in the history of India. What was equally incredible was the names Agrawal managed to rope in in his maiden funding round: Goldman Sachs Asset Management, TVS Capital Funds, Investcorp, Avataar Ventures, and LeapFrog Investments.

Also read: Roti, Kapda, Makaan, Bima: InsuranceDekho's Cover Drive In Bharat

There was another dazzling thing waiting to be unboxed. Within two months of the Series A funding, a bunch of new investors wanted to pump in more money. The founder couldn’t say no. “Who can say no to biggies like MUFG and others,” he says. In October, InsuranceDekho raised another $60 million, and got a new set of backers in Japanese giant Mitsubishi UFJ Financial Group, the insurer BNP Paribas Cardif, Beams Fintech Fund and the family office of Yogesh Mahansaria, the founder of Alliance Tire. What was also interesting was the fact that existing investors such as TVS Capital, Goldman Sachs Asset Management and Avataar Ventures also invested.

Praveen Sridharan tells us what made him back the rookie founder twice in a year. People who buy into the InsuranceDekho story, reckons the partner at TVS Capital Funds, like what they’re doing, and continue to believe that they will be able to generate growth over a period of time. “We look at businesses from a multi decadal aspect… it’s not a five-year journey for us,” he says, pointing out a bunch of positives about the insuretech startup. First, the venture has focussed sharply on execution. Insurance, he underlines, is an execution-heavy business. It requires people on the ground, and it requires figuring out how to work with people at scale. “They are strong in this aspect,” he says.

Second, their focus on people, frugality and capital efficiency is a big plus. “That’s why they had strong interest among backers in both the rounds,” he says. “The guys who stand out will always attract interest whether it’s funding winter or no winter,” he underlines. The challenge for InsuranceDekho, he points out, is to maintain the culture of frugality, execution and capital efficiency. “As you scale higher and higher, the challenge is to maintain the culture with which you started,” he says.

Agrawal, meanwhile, is aware of the big task and ask. “Businesses need investments, and at some point of time, a company has to make money. Period,” he says. InsuranceDekho, he adds, might not be making profit now, but soon it will for sure. “I am building a sustainable business,” he says, adding that capital raising and valuation is an outcome. “If I chase these outcomes, I won’t be able to build a sustainable business,” he signs off.

(This story appears in the 12 January, 2024 issue of Forbes India. To visit our Archives, click here.)