At just seven years old, insurance technology firm Turaco is already beating the odds. With many Kenyan startups folding due to capital constraints and a difficult economic environment, the company has stayed afloat and scaled operations across four African markets.
CEO and co-founder Ted Pantone talks to us on how the company navigated funding headwinds, its strategy for reaching millions of low-income customers, and why throwing out the traditional insurance playbook was key to its growth.
The last few years haven’t been easy for startups. How has Turaco weathered the storm?
Well, it hasn’t been easy. There have been lots of challenges, and I think the hardest was getting started—finding the first users and really proving that there is a product-market fit.
Because we weren’t an insurance company at the start, we had to work with partners, and we got some incredible partnerships that really enabled us to get off the ground. Regulators have been very supportive.
But one challenge many startups face has been capital – getting the capital they need deployed just when they need it.
There were a few moments when we were kind of knocking on death’s door – close to running out of cash, but by God’s grace, we kind of found the right investors that wanted to believe in our vision and come alongside us at the right times.
Your last fundraising round was in 2022. When are you going back to the market?
I would say it’s likely that we’ll be going to the market for series B next year, possibly late this year or early next year. The nice thing about being break-even is that you don’t need to raise money to survive anymore, right? You can raise money for growth and we’re looking for growth opportunities that we’ll raise capital for from the next round.
When did you break even?
In Kenya, we broke even around two years ago. In Uganda and Ghana, around a year ago. Nigeria is still not there yet. It’s our most recent market, so it just hasn’t grown to that extent yet.
If you don’t raise new funding, will you still be in business by, say, 2030?
We could never raise another dollar and we’ll be growing. Probably not as fast as if we raised money, but still very fast for the future of our company.
The difference with our model is that we’re building a business for profitability from very early on, which means that we probably haven’t grown as quickly as we would’ve grown otherwise; we would have scaled and hired a bunch of developers to build our technology in one year instead of three years.
You’ve hit four million users. The target is a billion. What’s the game plan?
We have a very clear eye on getting to 10 million and a little bit of clarity on getting to 100 million. Getting to a billion? We still don’t know how we’re going to get there, but we believe that we can and we will. We want to prove to the world that every insurance company should be considering mass market consumers as a key driver of their growth, and we will.
So, for 10 million users, that’s a very clear path. We’ll be there next year. I would be very surprised if it’s not next year, or maybe eight months from now. How?
I know the partnerships that we have in place, some of which you already know about, some of which are coming that I still can’t say much about. I’m sure these partnerships that we have in the pipeline in the next 12 months are going to bring us millions of users.
What’s fuelling this growth? Are you relying mainly on partnerships?
Yes, partnerships are our key driver of growth. In Kenya alone, we’re already in the process of finalising 15 partnerships. Across our four markets - Kenya, Uganda, Nigeria, and Ghana – it’s probably close to 50 partnerships.
Are you considering direct-to-customer sales?
No. We don’t do any direct-to-customer sales; you have to buy it through a partner.
And the reason is, basically, I think it’s a much more effective model because you can consistently get paid through partnership and make it more consistent than someone just choosing to send money every month.
What’s different about Turaco that helps you reach the mass market that others haven’t?
We threw the textbook on how to do insurance away on day one. Being a technology-first company, we don’t follow the standard rules that the actuaries and insurance investors want you to follow.
We’re coming at this with a fresh set of eyes. We’ve hired good insurance people, so we know how to do insurance properly, but we’re not constrained by the legacy systems that most insurance companies are constrained by. And that’s what has enabled us to grow so fast.
You recently got a microinsurance licence. What impact has that had?
It has changed our business a lot. To start with, the model hasn’t changed, but we’re able to design products a lot more efficiently and that are really specifically tailored for the customers that we’re going after.
It has also enabled us to use our technology to its fullest potential that it has. So, because we’re now paying claims ourselves, our median turnaround time for a claim has come down to four hours, from at least three days. That’s a win for the customers, right?
Finally, many insurtechs targeting the mass market have struggled to stay afloat. Why do you believe Turaco will succeed where others haven’t?
I think it’s really hard to follow the Western insurtech model in Kenya, and that’s where many insurtechs have got it wrong. The Western model is that you take one small slice of the value chain and you service it.
The problem is that the market here is not that big. So that small slice doesn’t have that much profit potential.
Another problem is that no one likes middlemen, so everyone will always try to cut you out and get rid of you if that’s your model as a company.
We faced that at Turaco when we first got started as a broker. As an insurtech, you either want to own the customer or the product.
Now that we are an insurance company, we own the product, so we have the ability to control our destiny a lot more, which I think is different from the other insurtechs in the marketplace.
