Posts

Laka gears up for European expansion with latest $4.7m investment

Browne Jacobson’s corporate technology team has advised the founders of InsurTech startup Laka on raising $4.7m funding to fund the next stage of its growth strategy.

The round was led by leading venture capital firms LocalGlobe and Creandum, with Yes VC (the venture fund founded by Caterina Fake, co-founder of Flickr, and Jyri Engestrom, co-founder of Jaiku and Ditto) and prominent angel investors, Nick Evans (Chairman of Rapha) and Oren Peleg (former CEO of Fitness First), amongst others, also investing.

The investment will be used by founders Ben Allen, Jens Hartwig and Tobias Taupitz to grow its footprint across Europe, establish its EU base in the Netherlands later this year and further develop its product portfolio. This will include a recovery and health product designed specifically to help cyclists who have experienced injury or accident to access the right services.

Founded in 2017, Laka specialises in insuring high-end bicycles in the UK and has developed a unique insurance model in which the cost of claims is split fairly between customers, with premiums capped at market rate for customer protection. Fewer claims lead to lower costs. On average Laka’s users have saved more than 80% compared to market prices.

Browne Jacobson’s London based team comprised corporate technology partner Jon Snade, associate Harry Pearson and senior associate Nicole Judah. Jon also led the team that advised Laka on its last successful seed round in 2018 which raised $1.5m.

Tobi Taupitz, CEO of Laka, said: “Cyclists should be able to completely trust their insurance providers – through our community-based approach, we are bringing our customers, many of whom have previously been ill-served by legacy players, a product that ensures fair treatment, trustability and transparency.

“We’ve seen a fantastic response from the British cycling community, who have become our greatest advocates, and we’re looking forward to launching Laka across Europe and beyond.”

Remus Brett, partner at LocalGlobe, added: “The beauty of Laka is it returns insurance to its pure, mutual heritage. Laka’s members and their shared interests incentivise positive behaviour which in turn benefits the entire community.

“These principles are over 300 years old, the difference being technology and increasing consumer awareness that traditional insurance models, with complex clauses, excesses and a painful claims process are fundamentally broken.”

Carl Fritjofsson, partner at Creandum, commented: “The word disruption is used all too often in the world of entrepreneurship, but with Laka it actually fits very well. This is a fundamentally unique and different approach that turns the old business model of insurers upside down.

“Laka truly improves the user experience 10x as well as lowers costs for its policyholders, all while providing a fair and transparent insurance coverage. What’s not to love?”

Jon Snade, concluded: “We are once again delighted to have used our extensive market knowledge and sector expertise to help Laka secure investment towards realising its growth ambitions outside the UK. Its business model is genuinely market disrupting and it’s a pleasure to support businesses that are truly innovative.”

Browne Jacobson has built a reputation for its innovative approach to delivering legal services to startups following the launch of the Grow programme in 2017 and which is tailored specifically for high-growth companies at any stage of the start-up journey. The firm works with over 100 high-growth businesses across a broad range of sectors but notably in InsurTech and FinTech.

Pinsent Masons gets cloud guidance improved for insurers

International law firm Pinsent Masons has seen a number of its recommendations enacted following its response to EIOPA’s consultation on cloud guidance, making it easier for insurers to comply with their regulatory requirements.

The guidance, which sets to place strict regulatory demands on insurers in respect of both the contents of their contracts with cloud providers and their governance of those contracts, has been under review since June 2019, with the final guidelines now being issued.

In its response to the consultation, the firm raised a number of concerns about both the wording of and rationale for some areas of EIOPA’s draft guidance. Those concerns addressed fundamental matters such as the scope of the guidance and potentially confusing concepts and terminology. They also focused on the requirements around the content of insurers’ cloud contracts, their exit planning, the extent of information that insurers would have to document about their contractual requirements, and the location of data in the cloud.

Pinsent Masons’ recommendations have led to the re-drafting of certain definitions, the removal of unclear language and greater clarity and alignment with the European Banking Authority (EBA).

Some of the changes included the removal of references to ‘material outsourcing’ to describe the concept of a ‘critical or important operational function’. EIOPA also agreed to drop plans that require insurers to assume that their purchase of goods or services from, or entry into arrangements with, cloud providers constitute outsourcing arrangements that are subject to its guidance in cases where the matter is unclear. They also deleted wording around having ‘directly measurable’ service levels specified in contracts after the firm said it was it was unclear how insurers could comply with that obligation.

Commenting on the guidelines, head of Fintech propositions at Pinsent Masons, Luke Scanlon said: “When regulators bring out guidance and impose rules which vary slightly from other requirements for regulated entities, this can lead to unintended consequences and cost for financial institutions. Ultimately, this cost is borne by the customer and therefore it is positive to see that EIOPA has taken the views of the sector into account and made some adjustments to its final guidance.

“In our response to the consultation we put forward the views of our clients impacted by this guidance to ensure that the final guidelines are fit for purpose. This is particularly important following recent data from the Bank of England which shows that insurers are falling behind with regards to the adoption of cloud based technology in comparison to banks. We hope that these changes will now facilitate far greater adoption across the sector.”

All new cloud outsourcing arrangements entered into or amended on or after 1 January 2021 will be subject to the guidelines, while insurers will have until the end of 2022 to bring cloud outsourcing contracts entered into prior to that date into line with the new requirements.

Browne Jacobson tech team advises on £208m Hastee investment

Browne Jacobson’s corporate technology team has successfully advised London fintech start-up Hastee on securing £208m of funding, comprising of both equity and a unique credit facility, including on the corporate aspects of a new, unique £200m credit line. The investment was led by Umbra Capital and supported by IDC Ventures and others.

Established in 2017 by James Herbert, Hastee will use the investment to develop and grow its award winning, revolutionary Hastee app which allows workers immediate access to 50% of their earned pay on-demand, reducing reliance on payday loans, credit cards and overdrafts.

An employee can withdraw up to £100 free of charge every month. Subsequent withdrawals are subject to a 2.5 per cent transaction fee. The employee withdrawals are initially funded by Hastee which is subsequently reimbursed by employers on each normal pay day. There is no cost to employers and the solution can integrate with existing HR and payroll processes. Clients include London City Airport, IRIS – the largest privately held software company in the UK, recruitment specialists Brightsparks, Avery Care Homes and pub and restaurant operator Mitchells & Butlers, whose brands include All Bar One and O’Neill’s, amongst others.

Browne Jacobson’s London based team of Jon Snade and Harry Pearson advised Hastee on all legal matters of the investment, as well as assisting with the corporate aspects of a new £200m credit line from Umbra, which will be used to pay employees directly.

James Herbert, Hastee founder and CEO, said: “We are delighted that our investors, led by Umbra, have chosen to partner with us as we bring financial freedom to people across the country. This investment will help us support a greater number of organisations in reducing financial stress, increasing wellbeing and improving the productivity of their employees and, as a result, their organisations.”

Browne Jacobson corporate finance and tech partner Jon Snade added: “We are delighted to have advised Hastee on this significant investment package for the business. Hastee has seen incredible growth since it was formed two years ago and this latest investment will play a huge role in helping to reach new clients and sectors. It shows that there remains a strong appetite amongst investors in fintech starts ups such as Hastee that offer cutting edge tech solutions which have strong prospects of delivering a healthy return on investment.”

Browne Jacadvobson has built a reputation for its innovative approach to delivering legal services to start ups following the launch of its hugely successful Grow programme in 2017 and which is tailored specifically for high-growth companies at any stage of the start-up journey. The firm works with over 100 high-growth businesses through Grow across a broad range of sectors but notably in fintech and insurtech.

EY PHOTO

How EY is innovating financial services corporate finance

Growth, development, innovation and opportunity: these four words perfectly encapsulate the working environment within EY’s Financial Services Corporate Finance team in London.

“Our growth rate at the moment is incredible,” says Ian Cosgrove, Partner and Head of Financial Services Corporate Finance at EY. “In the last 18 months our deal volume has doubled.”

Ian’s Corporate Finance team started expanding in earnest in 2015, increasing its coverage to include FinTech and asset servicing, and hiring financial services debt advisory specialists to sit alongside M&A advice professionals. Ian expects to keep recruiting at the same rate over the next two years to reflect the market demand.

“We’re constantly bringing in talent to help execute the expanded pipeline of work we’ve got, and to make sure we are well resourced to keep up with the pace of demand,” he says.

“A strong part of our identity is innovating and thinking ahead to what corporate finance should look like in the years to come,” explains Ian.

This desire to be innovative and stand out from the competition is reflected in the fact that Ian’s Corporate Finance team has brought M&A and debt advice under one umbrella. Many other professional services firms as well as boutique advisory houses splits these two services.

“This gives us an edge,” says Ian. “In many sectors, there are difficulties around talking about one side of your balance sheet and not being able to discuss the other side. We can to the entire capital structure and bring a holistic view to clients. It enables us to think about the bigger picture; we can ask ‘what is on your agenda and what are you looking to achieve?’ We don’t just have a single product, but a broader solution.”

The market is moving at a rapid pace in terms of embracing digital technology. The Financial Services Corporate Finance team is looking to harness technology to improve analytics, find new sources of capital, and streamline the whole M&A process. “Any client embarking on a corporate finance transaction knows it’s a long and intensive journey. We’re investing in technology to speed that up because momentum is important, while at the same time improving the quality of the deal,” says Ian. “Also, we are developing a tool that will use Artificial Intelligence to improve our ability to match those looking for capital with those who have it.”

The team is also using technology to take clients’ underlying data and present it back to them in new and insightful ways. “Not just in a transaction context, but to help them make other business decisions too,” says Ian.

Kaidi Kuusk, an Assistant Director in Financial Services Corporate Finance at EY, describes her work in Ian’s team as “incredibly exciting, fast-paced and innovative”. Kaidi joined EY’s graduate programme in 2008 and enjoyed fast career progression to her current rank. She says her rapid rise reflects a working environment that encourages career development.

Kaidi has been supported in her career by both the Corporate Finance team and the broader Transaction Advisory business, and says she enjoys the variety of her job. “I’ve been able to get involved in transactions in an accelerated way, so I work on anything from banking to payments to some niche insurance sectors, and with clients ranging from founder-owned companies to major corporations,” she adds.

She likes the fact that she sees transactions through from start to finish and can therefore build relationships with key stakeholders and really get under the skin of businesses to help solve their most complex challenges. “There’s also a lot of deep sector knowledge and expertise within EY’s Financial Services business, so I can quickly learn a lot about a variety of sectors and transactions,” she says.

Kaidi has recently taken on a secondment opportunity at EY. Working in the firm’s Global Banking Leadership team, she is helping to grow the banking and advisory transaction business. “This came about through conversations in my review. I was encouraged to take advantage of the breadth of areas at the firm and improve my understanding of how it works,” she says.

For those interested in joining EY, there is a clear, structured path to improve knowledge. “The Corporate Finance team in our financial services business is a small, supportive family, with lots of opportunity for progression,” says Ian. “There are a range of learning opportunities, delivered in our own team and across the firm, and covering sector-based topics as well as core corporate finance skills, such as valuation and modelling,” adds Kaidi. As EY staff progress their careers, there are plenty of opportunities to learn, collaborate and have fun achieve within the firm.

And this cross-firm collaboration extends into the workplace. “If you’ve got a regulatory or accounting problem for example, there’s someone a few desks down who can sit and have a coffee with you to explain it,” says Ian. “Working at EY is all about collaboration. It’s why we deeply value our connections with everyone – clients, like-minded organisations and individuals, and each other.”

All of this highlights the strong, inclusive people culture within the firm. EY is proud to have a number of employee networks, which celebrate and promote diversity and inclusion, and provided further opportunities for its employees to connect with like-minded people from other teams. It’s one of the main reasons why people choose to join and remain at EY – and the experience they have lasts a lifetime.