Digit: First Unicorn of 2021

According to Bloomberg, Indians have produced 61 unicorns’ start-ups, of which 40 of them are based outside the country.

21 unicorns that are based in India have a cumulative valuation of $73.2 B vs $99.6 B worth of unicorns founded by Indian overseas¹

11 Indian start-ups were added to the list of unicorns in 2020 but it’s always a proud moment to be ‘FIRST’

DIGIT Insurance became India’s first unicorn of 2021

Founded in 2016, Digit insurance is a tech-driven general insurance company that offers customized policies on health, auto, travel, smartphones, commercial properties such as stores and holiday homes. The company was founded by insurance veteran Kamlesh Goyal and was backed by Prem Watsa’s Fairfax holdings which together had invested more than $142 Mn in 2017 and 2018 making it 88% stake in the company²

Kamlesh Goyal holds a strong background of working in insurance industry for 33 years with various organizations like New India Assurance, CEO at Bajaj Allianz General Insurance, Lead Bajaj Allianz life insurance

In Nov and Dec 2017, Digit collected Rs 2.66 Cr as Gross direct Premium and by May 2018 It had crossed 1,50,000 customers with Rs 94 Cr of Gross direct premium³

In Dec 2020, the insurer ended up with Rs 2,150.89 Cr in gross direct premium

As per rules by IRDAI, insurer always must maintain 150% solvency and to maintain that funds were required, so in Jan 2020 it received approval from IRDAI to raise $84 Mn (~Rs 600 Cr) from 3 growth equity investors with combined 11% stake

A91 Partners
Faering Capital
TVS capital

With this combined investment Digit’s total funding was now $224 Mn.

Apart from these 3 investors, 72 Digit employees also invested $4.34 Mn
Virat Kohli and Anushka Sharma also infused $340K

By Jan 2020, Digit has served more than 5 Mn customers. As per the IBEF report, the Indian insurance industry was expected to reach $280 Bn by end of 2020 with a CAGR of 12-15% over next 3-5 years²

Coronavirus was a blessing in disguise for the insurer as they were the 1^st in the industry to introduce a COVID-19 health insurance plan “Under the sandbox initiative of IRDAI” which covered 2 Mn people which contributed 7-8% of their total business. In Jan 2021, Digit attained its unicorn status with USD 1.9 Bn valuation after raising $18 Mn (Rs 135 Cr) from existing investors²

As per International Financial Reporting standards, Digit is inching closer to profitability.

Digit’s April-December 2020³

Growth in Gross domestic premium- 33.8% YoY to Rs 2,150.89 Cr
Market share- 1.48%
General insurance industry growth- 2.53%

As of December, the expense of management as a % of gross direct premium stood at 36.74% vs 54.83% YoY

In an interview Mr. Goyal said, “Overall, the worst is over. We are expecting our growth trajectory to continue and will now look at geographical expansion in Tier 2, 3 cities. Some repricing in segments like motor (third-party) and health are also expected, which would help sustain growth.

Will digit Unicorn status affect the Private and the Government insurers?

References:

Poojan Sheth

Pharma graduate from NMIMS University, with a work-ex of 5 years and thriving in the Pharmaceutical International Sales sector.
A sucker for sports and a true Red Devil ( If you know, you know )

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