‘DTC, embedded insurance models have big potential in SEA’: Eurazeo’s Albert Shyy

Eurazeo, a leading global investment company based in Paris, has launched a EUR 200 million (US$213 million) insurtech fund as it expands its presence in Southeast Asia.

The VC firm has named Albert Shyy as Managing Director (Venture), who will lead the fund from its Singapore office. Shyy previously held various key roles at Burda Principal, STRIVE (formerly GREE Ventures), and Lazada Group.

In Southeast Asia, Eurazeo invests in Series B and Series C stage companies. It recently led a US$65 million Series B round of Qoala.

The VC fund also has offices in New York, London, Frankfurt, Berlin, Milan, Madrid, Luxembourg, Shanghai, Seoul, and Sao Paulo.

e27 had a quick chat with Shyy about the VC fund’s plans in Southeast Asia.

Excerpts:

Why did Eurazeo decide to expand to Southeast Asia, although the EU region presents excellent opportunities and remains largely untapped?

Eurazeo has a long track record across Europe and will continue to invest in that market across multiple stages and asset classes.

However, the firm is also seeking to internationalise, particularly in the US and Asia, to double AUM to US$60 billion in the next five to seven years.

Southeast Asia has seen tremendous growth over the past few years, and we are excited to look for more investment opportunities in this region as the market expands.

There are already a few investors focusing on the insurtech vertical in the region. Why does it need another fund? What opportunities does it present to Eurazeo?

I think we can complement many of the existing funds that are active in this sector, which tend to be more focused on the earlier stages. We see more insurtech companies in this region grow beyond Series A, which feeds into our target as growth investors.

It can also bring broader access to international markets from having our base in Europe and potentially additional pools of capital from within the Eurazeo platform down the road.

Also Read: Why Asia’s insurance industry is poised for collaborative disruption

Also, this fund will have a greater focus on the insurance sector than most funds, which tend to have broader mandates. It will also let us build deeper connections within the industry, including our Limited Partner, a global insurer interested in this region.

I believe there will undoubtedly be opportunities for more commercial or strategic partnerships with industry players through this fund.

Can you share more details about the fund — the philosophy, number of investments planned, the average ticket size, etc. Have you identified any startups for investments yet?

We are looking at growth stage opportunities (Series B and C), with a typical cheque size of US$10-20 million+. We have the flexibility to lead or co-invest. We have made the first investment into Qoala, where we led its Series B round.

Does the regional fund plan to invest in startups across APAC or SEA?

The fund can invest across APAC, but the primary focus is on SEA. Ideally, about two-thirds of the investments would be made in this region

How is the overall insurtech industry growing in SEA? Where is it headed?

While the sector is already sizeable (over US$100 billion gross written premium), insurance penetration rates are still low across most of this region, especially Indonesia, the Philippines, and Vietnam (less than 3 per cent in each market, as per a report by BCG and ZA Tech last year).

At the same time, we are seeing digitalisation accelerate growth/adoption as in many industries (more data to inform risk/pricing/product creation, ability to access more consumers faster and more efficiently, including within more rural areas, etc.). The latest Temasek-Google-Bain report predicts the digital insurance market to reach US$9 billion by 2025 from US$3 billion currently, so we see rapid market expansion in the digital/tech segment as well.

There are multiple insurtech models in the region. Do you see a bright future for any models here? Why?

It’s a bit early for me to say as I would like to dig deeper into each segment. However, since penetration and awareness are still so low in most markets here, I think products that can build awareness/trial (such as micro-insurance) or those make the whole customer journey much easier (D2C, agents, embedded models) can make a significant impact.

Do you foresee potential applications for crypto/blockchain/web3 in the insurtech vertical?

It is tricky because of the high volatility and limited oversight/regulation. But I think the demand is certainly there, and companies will figure out smarter ways to price and cover risk in this space.

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