U.K. Insurtech Startup Marshmallow Raises $90 Million to Expand Services

Marshmallow, a U.K. startup, has experienced significant growth over the years by leveraging data science innovations to provide car insurance policies to immigrants and other underserved consumers. With a million drivers insured and a profitable annual revenue run rate of $500 million, the company has secured a fresh $90 million in funding to expand its operations.

Marshmallow plans to utilize the funding to venture into financial services and introduce additional insurance products that cater to a growing population in the U.K., despite the challenges posed by Brexit. The company aims to provide a range of services that facilitate integration, including driving insured vehicles, purchasing home insurance, and accessing loans.

According to CEO Oliver Kent-Braham, “We view migration as a vast opportunity.” He noted that the U.K. is experiencing a shortage of workforce entrants, with 1.2 million migrants arriving in 2024 alone. “We need migration to augment the workforce, and we want to assist people in moving to and integrating into the U.K.,” Kent-Braham added.

Marshmallow intends to launch its first lending product later this year, paving the way for a “one-stop shop” that offers a comprehensive range of financial and insurance services tailored to the needs of new arrivals in the U.K.

This funding round is roughly evenly split between equity and debt, with a valuation of just over $2 billion. In contrast, Marshmallow’s previous funding round in 2021 was valued at $1.25 billion. The company has witnessed substantial growth, with its insured driver base expanding from 100,000 in 2021 to 1 million currently.

Portage Capital is leading the funding round, with participation from BlackRock and Columbia Lake Partners. Previous investors in the company include Passion Capital, Investec, and Scor. Marshmallow has raised approximately $220 million to date.

Notably, the new funding round has been in progress since at least January, and Kent-Braham mentioned that a portion of the equity was raised as convertible debt in 2023.

The funding comes at a complex time for insurance startups in Europe. While some companies, like WeFox, have faced challenges and significant valuation drops, others are demonstrating more sustainable business models and attracting investor attention.

For instance, Ominimo, a Polish startup, recently secured a major strategic investment at a valuation of over $200 million. Like Marshmallow, Ominimo focuses on car insurance and leverages AI to revolutionize risk prediction.

While data science and AI are becoming essential components for insurance startups, Marshmallow’s approach to its target customer base and commitment to inclusivity and diversity set it apart from competitors.

The company’s founding team, including CEO Oliver Kent-Braham and his identical twin Alexander, as well as David Goaté, embody the principles of diversity and underrepresentation. Marshmallow is one of only two “unicorn” startups in the U.K. founded by a Black individual, the other being WorldRemit.

According to a 2024 study, only 3% of startups with valuations over $1 billion in the U.K. and the U.S. have Black founders. In this context, Marshmallow’s investors view the company’s diverse leadership as a significant strength.

Devon Kirk, GP and co-head of Portage Capital Solutions, noted, “This is a very strong founding team. We believe that financial services benefit from diverse perspectives and leaders developing innovative solutions to address those needs.”