Launched two years ago, AXA’s investment fund has already invested in around 20 initiatives involving start-ups who are reinventing the insurance industry and the world of asset management.
How can you tell you’re at the offices of a start-up? Having visited a large number of them over the past two years, I can confirm that they often have a foosball table somewhere not too far from the coffee table. While AXA Strategic Ventures (ASV) may share start-ups’ taste for innovation, we haven’t gone as far as to set up a game’s room in our own offices yet. Our premises, in the central Paris district of Madeleine, offer somewhat more sober surroundings. ASV is an investment fund which navigates between two worlds. On one side is AXA – our “limited partner” – and on the other are start-ups, where responsiveness and curiosity are the key words and the main elements when it comes to understanding and attracting tomorrow’s entrepreneurs. One of our sources of inspiration is Google Ventures, Google’s heavyweight investment fund, which notably invested in Uber in 2013.
Since its launch in 2015, ASV has become a minor investor – with investments ranging from 250,000 to 15 million euros – in around twenty Insurtech and Fintech start-ups. So what exactly do these fledgling companies based in the US, the UK, Israel and France have in common? All of them offer innovative technological solutions for the insurance sector. Their solutions range from insurance policy sales platforms accessible via smartphone (Policy Genius) to the use of the “blockchain” (Blockstream), as well as tools that predict how the prices of online plane tickets will evolve (Flyr).
Two main assets can explain AXA Strategic Venture’s success. Firstly, the influence of the AXA brand, which is internationally recognised as a benchmark in the insurance sector. Secondly, the size and quality of our team: around fifteen people from sectors as diverse as those of risk capital, strategic consultancy and entrepreneurship. I myself created my own start-up straight after finishing my studies. This ensures that we are responsive and able to adapt to the ever-changing world of Insurtech.
In 2017 we plan to focus our efforts on certain unavoidable technological trends: connected health, artificial intelligence, user interface and the use of data. We regularly meet with AXA group’s operational teams, and the latter share with us their vision of the main challenges that will arise from the transformation of their sector. They also speak about concrete issues they currently have to deal with: lowering and managing claims costs, modelling and anticipating risks, creating simpler procedures for clients etc. They have high expectations regarding the current technological solutions aimed at prevention measures and medical diagnosis, which should make handling claims from clients with chronic diseases easier, or indeed solutions which use artificial intelligence to improve certain services.
In a world such as the world of risk capital, where things are constantly changing, putting in place a few rituals can be a welcome move. Every Tuesday afternoon, the ASV team comes together to review its investment portfolio. During each meeting we study four or five investment opportunities. The meetings take place in the form of visio-conferences involving participants in London, New York and San Francisco, where the fund’s other offices are based. Our first meeting in September 2016, following the summer holidays, was particularly memorable. We had just moved to our new premises in the 8th arrondissement of Paris (Madeleine). Alex Scherbakovsky, an ASV partner based in San Francisco, presented the company One, Inc. to us, a Sacramento-based company that is already proving itself to be successful and that has created an interesting IT solution using an “SaaS” (Software as a Service, or Pay-as-you-use software) model.
With a 300% growth rate in three years, the young company had several American investors licking their lips. One, Inc., however, preferred to get a European partner like ASV on board, in order to build ties with Europe and, also, with AXA.
Decisions have to be taken quickly. We can’t just turn around to a start-up and say: “let’s speak about it again in three months’ time”, because many of them are facing short-term issues. There is also a risk that they will find another investment partner. For One, Inc. all the indicators were good, notably the most important one: the personality of the people running the company, with whom we were sure we were going to get on. To strengthen our convictions, we also organised meetings with AXA specialists from the domain of activity concerned, and the latter were also part of the decision-making process. In this case, we had to verify the reliability of the tool developed by One, Inc. A few weeks later, the experts came back with a positive verdict. As a result, in October ASV became a shareholder in the California-based company and has a seat at its executive board table.
This was the conclusion of the first “growth” investment of our fund’s short existence so far (with “growth” being the term which naturally follows “start-up”). And this is just the beginning! We still have around 200 million euros at our disposal to invest in projects over the next three years, focusing on two key strategies: “early stage” investment, for promising fledgling companies, in order to facilitate their development; and a “growth” strategy, where the fund invests in companies who are already at a more developed phase (such as One, Inc.).
Neura : Artificial Intelligence for the health sector
The reason behind Gilad Meiri’s decision to create a start-up was his wife’s diabetes. “How can you calculate the best moment for an insulin injection?” he asked himself. The IT expert, who learnt his trade with the Israeli army, has developed a type of software which analyses data from a users’ different connected devices in order to predict behaviour and risk factors. In 2013, he launched his own company, Neura, in order to sell this revolutionary personal risk assessment tool to insurers. In January 2016, AXA Strategic Ventures invested 11 million dollars in the project. Thanks to this funding, Gilad Meiri can now think big. He has just opened an office in China, where the main manufacturers of connected electronic devices are based.
Keeping pace with the latest transformations within the sector
On paper, ASV operates like any other investment fund. Part of our team comes from AXA but also, and above all, from the world of investment in new technologies. But we have an additional mission: to place AXA at the heart of the Insurtech sector. AXA, the second largest insurance company in the world today, cannot be left behind when it comes to the newest developments within the sector – indeed, it must be one of the companies pushing the envelope. To do that, its relationship with the start-up community must work both ways. One of my tasks is to help the companies in our portfolio to gain access to the traditional economy, of which AXA is a heavyweight stakeholder. Last year, I organised a meeting between the founders of Blockstream and figures involved in some of France’s main institutions, including an economic advisor from the Elysee (the French government) and top executives from the Bank of France, in order to help the blockchain experts understand the relevant regulatory framework that currently exists in the country. The risk capital world is a small one: the credibility of our approach comes above all form our ability to give real help to start-ups. Our reputation as a business facilitator is indispensable when it comes to optimising our sourcing.
We will soon be completing our AXA Strategic Ventures global initiative by opening an office in Hong Kong. It is by thinking “globally” that we will be able to attract innovative entrepreneurs and support their development.
Behind the word “sourcing” hides one of our self-confessed obsessions: if we want to succeed in this business we must know how to identify promising projects as soon as possible. We must therefore be present at the “source”. And how do you achieve that? By remaining constantly active. You have to be present at events such as the Money 20/20 fair in Las Vegas, or at conferences organised within the sector such as the Paris Fintech Forum, held on 25 and 26 January at the Palais Brongniart conference centre in central Paris. Indeed, you also have to be present in universities: our fund also participates in the annual event “Start-up Weekend”, a business creation competition staged at “Ecole Polytechnique” University. We have also just launched a tender for projects in Israel, aimed at the extremely dynamic community of entrepreneurs present in the country. The initiative has been set up in partnership with JVP (Jerusalem Venture Partners), a prestigious local fund. Thirty applications were received, with around half of them judged eligible. In order to attract innovation, you have to be present where innovation happens. The next phase for our team is to open an office in Asia during the first half of 2017, probably in Hong Kong. Asia leads the way internationally when it comes to mobile phone interfaces, and AXA Strategic Ventures firmly intends to be part of future developments.
Fintech & Insurtech
As with most sectors – the transport sector (with Uber) and the online retail sector (with Amazon) being prime examples – over the last ten years the world of finance and insurance has witnessed the arrival of many new stakeholders from the world of the web. The latter have formed sectors known as the Fintech (Financial Technology) and Insurtech (Insurance Technology) sectors. More flexible and fearless than the long-standing behemoths of the sector, the young companies in this new sector aim to replace the technology currently in place with new and innovative digital models. Their final objective is to create swifter, cheaper and increasingly automated procedures for the end user. In 2016, 20 billion euros was invested into these sectors globally.