CatX raises $2.7 million to bring more alternative capital into the insurance sector

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Feb 11, 2024
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CatX, a platform designed to facilitate the flow of alternative capital into the insurance sector, has successfully raised $2.7 million in seed funding. Its backers include top Silicon Valley venture capital firms and angel investors from leading proprietary trading firms and hedge funds.

The funding round marks a key milestone for the company in its mission to bridge the gap between supply and demand in the reinsurance industry.

Earlier this year, CatX was accepted into the startup accelerator programme Y-Combinator, which has helped to build hundreds of successful companies including household names like Airbnb, Instacart, Doordash, Monzo and Dropbox. CatX was also named by TechCrunch as one of its favorite YC startups following its debut at the accelerator’s demo day in September.

The insurance sector is facing a critical challenge due to a shortage in reinsurance capital which is needed to protect insurers from major losses. This has led to substantial price increases, especially for risks like natural catastrophes and cyber threats. In some cases, this has forced insurers to limit their coverage or completely stop writing business such as hurricane insurance in Florida. CatX's innovative solution to this problem is to introduce more alternative capital to the market. They do this by offering high-return investment opportunities to institutional investors and providing them with the tools they need to understand insurance risks.

Benedict Altier, co-founderand CEO of CatX, emphasises the company’s vision: “Our goal is to help make the insurance industry more robust and adaptable in the face of increasing global challenges.

“In an era wherethe frequency and intensity of catastrophes are on the rise, the need for adequate capital to safeguard against these risks has never been more important.By channeling alternative capital into insurance, we're not only helping to close the growing protection gap but also unlocking a promising new asset class for investors that is uncorrelated to traditional investments like stocks and bonds.”

CatX is already working with more than 15 leading institutional investors, including North American pension funds, hedge funds and structured credit funds offering insurance companies the opportunity to access billions in capital through the platform.

Lucas Schneider, co-founder and CTO, adds: “At CatX, we focus on providing all the tools necessary for investors to understand and invest in insurance risk. Our platform features advanced risk models to generate actionable investment insights. A key focus for CatX is to make the whole investment process as simple as possible by digitising the workflow and utilising AI tools to shorten contract negotiations. Technological innovation is critical in attracting alternative capital providers that want sophisticated analytics and information tools.”

Sanford Lincoln from HackLegacy, a premier VC fund who invested in the round, highlights the transformative potential of the platform: “CatX offers a new model for the modern insurance market by opening access to investors outside of traditional reinsurance players and streamlining transactions with standardised paper and state of the art insights. CatX will help greatly expand reinsurance transaction volume to create a more liquid risk market to ultimately reduce costs and expand coverage opportunities for consumers across the world.”

The growing concern around the insurance coverage crisis underscores the extent of the problem. In this context, CatX's successful $2.7 million funding round marks a significant step in its mission to address these challenges. CatX presents a sustainable, long-term solution to address the challenges of the insurance sector by transforming insurance risk into an investable, tradeable asset class.