(Bloomberg) -- FSD Africa, a body funded by the U.K.’s Foreign, Commonwealth & Development Office, said it plans to help create insurance unicorns in the continent by mentoring startups and helping them raise funds.
The agency started a 10-week training program in Nigeria and Ghana this year for startups it called insurtechs, a term it used to refer to firms using technology to solve insurance challenges. Under the plan, FSD will develop the capacity of 10 startups in each country every six months, for the next three years.
At the end of the program the startups will “pitch to potential investors and they will have an opportunity to receive funding,” Kelvin Massingham, a director at FSD Africa said in an interview. “An African unicorn from Nigeria and Ghana in the insurtech space will be our ambition,” he said, referring to a valuation of more than $1 billion for startups.
African startups have been attracting investors eager to tap a youthful and digital-savvy population that’s struggling to meet its financing needs. Fintech companies have been expanding rapidly helping some turn into unicorns. Flutterwave Inc., an Africa and emerging markets-focused payments firm, on Wednesday announced a new fund-raising round that helped triple its valuation in less than a year to over $3 billion.
FSD is now focusing on insurance since penetration level is low in many countries in Africa. Premium income to gross domestic product is less than 2% for both Nigeria and Ghana indicating scope for insurance companies to expand in the West African nations. Massingham forecasts insurance startups will follow fintech companies in taping the opportunity in the continent.
“On average, innovators can receive half a million to a million dollars in early fund raising rounds,” he said.
