Tiger Global-backed insurtech firm Plum Insurance has forayed into the business insurance space covering risks related to financial, operational, legal, people, and governance, as it looks to expand its revenue streams by focusing on startups and small and medium enterprises (SMEs) customers.
“We are foraying into business insurance products for organizations of all shapes and sizes … right now there are insurance companies that serve organisations with more than 1000-5000 employees but business insurance for startups and SMEs is equally important,” said Abhishek Poddar, co-founder and chief executive officer (CEO) of Plum in an interaction with Moneycontrol.
Founded in 2019 by Poddar and Saurabh Arora, Plum Insurance offers employee insurance and employee health benefits, however, the decision to venture into the business insurance space comes at a crucial time when startups and businesses face multiple challenges around corporate governance, Poddar said.
“By providing comprehensive business insurance coverage, Plum enables businesses to protect their people, profits, and runways while instilling trust and confidence in stakeholders,” he added.
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Right now, less than 2-3 percent of the organisations are aware and are taking business insurance to protect from various risks. The market opportunity is huge. In fact, in the next five years the market will grow 10X of what it is today, Poddar mentioned.
In the business Insurance space, Plum will compete with the likes of firms like Digit, Probus and PaisaBazar. The new venture will open up cross-selling opportunities for Plum.
“Plum has around 3000 customers in India and many of them in fact wanted this product and I'm sure many will appreciate this product. We will also focus on newer startups and SME businesses,” He said.
Plum planning to turn EBITDA positive by FY25
In May 2021, Plum Insurance raised $15.6 million in its Series A round led by Tiger Global with participation from Peak XV’s (Sequoia India) Surge, Tanglin Venture Partners, Incubate Fund and Gemba Capital. The firm has so far raised capital of around $20 million over three rounds of funding.
“As of now we are growing at the rate of 3X year-on-year and we are contribution margin profitable. We expect to continue the process and we will turn Ebitda positive in the next 12-15 months…In the next two years we expect to clock an ARR of Rs 100 crores with free cash flow,” Poddar said.
As per sources In FY23, Plum reported an annual recurring revenue (ARR) of around $5 million (Rs 45-50 crores).
“Our goal is that each of these business lines (employee health, benefits, and business insurance) contribute equally to our revenues. In two-three years horizon, I expect business insurance product to contribute at least 30-40 percent of the total revenue,” Poddar said.
In a move to cut costs in the present startup funding slowdown and overall macroeconomic pressures, Plum laid off around 10 percent of its staff. However Poddar added that the company is hiring for different roles. Plum has around 350 employees.
“We anticipated a strong growth and in fact, we anticipated a 5X growth and over-invested in certain business and functions and we had to course-correct as markets changed … however we are hiring now for different roles, this month itself we would have added 10-20 people to our organisation,” Poddar said.
The firm wants to clock a revenue of at least Rs 10,000 crores of revenues and take a time frame of three to five years before venturing to other countries, Poddar said.
Tapping the AI wave
Plum is also tapping on the opportunities of generative AI for its employees within its operations as well as for its customers.
“We have introduced something called PolicyGPT which will help our customers to scour through long policy documents to find answers and make it easier to understand what's covered and what's not in one’s policy in the simple conversational format,” Poddar said.
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