Laka customers share the cost of their insurance claims.
Laka, a community-driven insurance startup has secured $4.7m seed round led by VCs LocalGlobe and Creandum.
The investment will help London-based Laka to expand the insurance service it currently offers to 5,000 cyclists already using the service, and fuel the company’s launch in the Netherlands later on this year.
Laka provides insurance for bicycles and cycling equipment against theft or damage but, unlike traditional insurance models, Laka customers work as a community to share the cost of claims.
The cycling startup handles all claims directly, divides the cost fairly and limits their customer’s maximum spend with a cap based on the value of the equipment insured by each individual member.
Today’s funding also comes from Nick Evans Chairman of Rapha, a well-known British cycling brand and Oren Pegg, former CEO of Fitness First.
Despite its unusual approach, Laka customers are still protected if there are a high number of claims in any given month, unlike traditional insurance providers who aim to settle as few claims as possible.
Another unique feature of Laka’s model is that it is entirely transparent, meaning that its customers can see exactly where their money has been used.
80 per cent of what each customer pays goes towards helping fellow members who have lost their bike, the other 20 per cent covers Laka’s operational costs.
Tobi Taupits, CEO of Laka, said: “We are bringing our customers, many of whom have been previously ill-served by legacy players, a product that ensures fair treatment, trustability and transparency.
“Ideally suited to high frequency and low severity forms of insurance, our ultimate ambition is to roll out Laka insurance products for a range of different purposes,” he added.
Carl Fritjofsson, Partner at Creandum, described Laka as: “a fundamentally unique and different approach that turns the old business model of insurers upside down.”
This latest round brings the total amount raised to date to $6.4m and will help to finance their expansion across Europe and develop their insurance product.