Alpha Ventures

Investment Thesis for Client

Team VentureEQ |
 Client overview
An online insurance platform that empowers insurance advisors and identifies appropriate insurance policies for consumers

About Client Businesses

Online insurance platform & marketplace # of customers: 1.5M+ (Mar-22) Description Contribution Margins Network
Founded in 2015 # of advisors: 235K+ (Dec-22) PoSP (Point of Sale • Onboarding and training
Presence) insurance advisors which in
Presence PAN India 14K+ pin codes Latest valuation: ~$900 Mn turn sells insurance products High Low ~235K PoSP
<<B2B2C>> to customers along with agents
Key financials1
physical purchase assistance
Operating Revenue Operating Expense Profits
Early signs of diversification Decrease in promo expense SaaS for agent • Digital tools for advisors to
+48%
distribution and for generate leads and customize
+58%
financial institutions insurance offering for end Medium Medium ~55K Client
+345%
99 Cr 90 Cr (subscription based) customer (Client Pro) Pro users
2% 0% 13%
Website usage 61 Cr 10% 7 Cr
<<B2B>>
Others 63 Cr Other opex
9% 8%
17% • API based solutions for
4% 0%
13%
Services to insures 98% PoS commission 20% financial institutions to access
0%
Commission 96% Advertisement
63% 47% 2 Cr Client’s technology platform
Employee benefit to enhance end customer
FY21 FY22 FY21 FY22 FY21 FY22 experience (Turtlefin)
Funding rounds and shareholding pattern2
Direct online • Digital unassisted model
21.7% Others distribution providing consumers an end- Not
$120 M
5.4% to-end online experience NA High Operational
since 2021
22.1%
$76 M

25.5% Business vs peers

$17 M • Lean Operational Model: Compared to peers, Client has a very lean model where 100% of
$29 M 19.4% Founders advisors are on commission basis vs on payroll
$7 M
$2 M • Advisor First-Model: Client's focus on empowering advisors by giving them digital tools, training,
Seed Series A Series B Series C Series D Series E Shareholding
pattern and competitive commission rates has created a huge network of ~235K PoSP agents
(2015) (2016) (2019) (2020) (2020) (2022)

Source: Company filings, Crunchbase; Tracxn; Primary Interviews; Team analysis

Insurtech industry landscape – Key trends & players
Client well positioned vis-a-vis peers to capitalize on the booming Insurance & Insurtech industry in India

Critical trends shaping the Indian

Client Comp 1 Comp 2 Comp 3
Insurtech Industry
Funding $250M $636M $104M $55.1M
Equity Funding in Insurtechs in India:
+45% 800 Stage Series E Public Series D Series C
$800M
600 Market Share 10-15% 80-90% <10% <10%

340 380
400 290 Revenue (FY22) $12.01M $96.6M ~$23.1M ~$1.58M
200 150
10 Valuation $900M $2,499M $327M $80M
0
2016 2017 2018 2019 2020 2021 Profit/ (Loss) $1.09M ($56.38M) (~$4.62M) (~$0.61M)
2 Year CAGR (2019-21)
19% 50% -6% 45% Insurance
45+ 50+ 40+ 40+
Americas Europe Asia India partners

❑ MSMEs in India expected to be next growth # of policies sold 3L+ / month 6L+ / month NA 0.5L+ / month
engine for Insurtechs
❑ Penetration & Distribution continue to be Recent events, Softbank halves
Surge in operating Closed $8.3M Revamp post
the biggest roadblocks for insurers stake as loss
trends and risks revenue of 57% funding in Nov’22 founder exit
❑ Superior Customer experience emerging as surges
the key differentiator for informed audience
Empowering Making insurance
❑ Strong push from Government via National Simplifying Smart tech and right
Proposition consumers &
insurance process advisor
simple using tech
Health Stack is a strong tailwind
agents capability
❑ Platforms act as enablers to the Insurance
industry– Insurtech brokers are a play on the “Client is one of the fastest growing and profitable insurtech firm, that focusses on empowering advisors
positive outlook for Indian insurance story and building trust, with technology at its center”
Source:; Crunchbase; Tracxn; BCG; Trendlyne; Company filings, Entacker, Team analysis
Investment Rationale
Key reasons that make Client an attractive investment opportunity

1.
1 A Model built on Trust 32. Scalability with Product-Market fit 53. Lean operating model
❑ Insurance a complex product for the masses- ❑ Focus also on how insurance is sold – not only ❑ Unlike peers such as Policybazaar, Client
95% policies sold via in-person consultancy how it is bought – Advisors as important cogs operates on a PoSP model (Connecting
as customers aren’t sophisticated enough to self- ❑ Digitized advisor onboarding (easy, fast and agents to consumers on their platform)
decide
more efficient), acquiring 160k advisors in 4 ❑ Agents are not on firm’s payroll and are paid
❑ Pioneered the PoSP broking model connecting years viz-a-viz normal timeframe of 20+ years based on commissions from policies they close
consumers & advisors who consult on policies ❑ Firm targets to onboard >1mn advisors by 2025 ❑ This enables a low fixed cost operating model
❑ Strong tech platform enabling short TATs while & expand footprint in non-Metro India, SE Asia which leads to positive unit economics and
also giving the human touch that builds trust ❑ Client spends several months iterating and profitability (As opposed to pure marketplaces
❑ Client’s power users instrumental in WOM improving its Minimum Viable Product with user like Policybazaar which have huge fixed costs
publicity, facilitating organic growth and enabling feedback; expands only after value has been towards telemarketing personnel)
65-70% revenue generation from non-Metros demonstrated ❑ This model has made Client the sole EBITDA
24. positive Insurtech player in India
High Growth with Profitability 5.
4 Sectoral Tailwinds
❑ Revenues have grown at a CAGR of 107% ❑ E2E digitalized customer journeys in the
b/w FY18-FY22 to ~INR 1bn in FY22 while evolving landscape contributing to growth
making profits in each of the last 3 years By digitizing human relationships and
❑ Shifting preference towards convenience &
empowering financial advisors rather than
❑ Focus on scaling only after proof of concept shorter turn around time by consumers
ensures low expenditure on Ad promotions eliminating them, Client has radically
❑ Digital channel opening up with immense
and healthy EBITDA margins of 9.43% opportunity around big data, cloud capabilities
changed how insurance is sold rather than
(FY22) and AI enabled customization how it is bought, because at its core,
❑ With 3.5mn annual policy issues (~10k daily), insurance is a push-product in India…
❑ Multiple initiatives by IRDAI and govt. to promote
Client expects business to grow 10x by 2025 insurance penetration – Sandbox, PoSP license,
with improving profitability relaxation in FDI ownership norms etc.

Source: Primary interviews, Team analysis;

Risks and Mitigants
To p 3 r e s e r v a t i o n s a b o u t t h e i n v e s t m e n t a n d p o t e n t i a l m i t i g a n t s

1.
1 Underwriters developing own 22.
Competitive pressure from 33.
Standardization of insurance
digital channels peers & substitutes policies
❑ Legacy underwriters are investing in own ❑ Policybazaar remains the largest insurtech ❑ IRDAI encouraging simplification and
tech capabilities and digital channels to broker with 10x the size of Client standardization of policies in industry
attain more autonomy in digital insurance ❑ New platforms coming up (Bima Sugam) ❑ This will impact the proposition of
Description

❑ Players such as LIC, HDFC Ergo, ICICI which will impact commissions & traffic insurance comparison platforms in general
Lombard have recently de-listed some of ❑ Digital first underwriters (Substitutes) like ❑ Moreover, platforms have been under
their products on 3rd party platforms Acko, GoDigit also emerging to tap into criticism for providing comparison solely
❑ This threatens network effects limited uninsured markets based on premiums (cost) and not
product availability will impact both adequately covering more intricate details
❑ Deplatformization a potential concern –
advisors and customers additions on the benefits side of policies
Customers compare policies on Client but
buy on other platforms
Degree

HIGH MEDIUM LOW

❑ Client provides a platform to compare ❑ Continue with an asset light business ❑ Client differentiates itself through its
policies thus building consumer trust model to keep expenses at a check network of advisors/ PoSPs – Insurance
Mitigants

policy sales largely driven by personnel

❑ Insurance a push product in India – Client’s ❑ Focus on advisor loyalty & retention
relationships in India
PoSP model creates USP along with skill enhancing activities while
exploring alternate revenue sources ❑ Low financial literacy imply consumers
❑ Large network of insurance agnostic PoSPs
continue to depend on the human aspect
❑ Venture into other value added services for of insurance sales – Human contact on
insurers (B2B) to retain them on platform Client much higher vs peers

Source: Team analysis, News articles, Primary research

Valuation and Stake considerations
Va l u a t i o n m e t h o d o l o g y a n d S t a k e c o n s i d e r a t i o n s f o r A l p h a v e n t u r e s

Methodology Description & Assumptions/ Data Remarks Valuation Summary

Valuation
1 Discounted Exit Value ❑ Based on exit multiple & expected IRR of 25% ✓ Approach from an ❑ Point 1: Description
Valuation Method Min Max Weight
investor’s perspective – ❑ Point 2:
❑ 5-year investment horizon assumed (3x MOIC) Disc. exit value 1,054 1,264 50%
Entry valuation to justify ❑ Point 3:
required IRR and Exit VC method 974 1,168 30%
multiple
Transaction comp. 657 711 20%
Weighted avg. EV 950 1,125
2 VC method ❑ Top-down valuation approach ✓ Approach is from an
external perspective- Net Debt ~0
❑ Incorporates growth in insurance penetration,
accounts for high growth Equity value 950 1,125
higher share of digital channel going forward
expected in industry and
❑ 5% market share assumed in 2027E (Cons. est.) digital channel
Transaction sizing and stake
❑ Equal split assumed across Insurtech, Lending,
3 Transaction comps. ❑ Benchmarks the valuation to precedent ✓ A premium of 20% Wealthtech & Payments (Total - $950mn)
transactions in the space and w.r.t peers applied to account for
superior margin profile ❑ Further, avg. ticket size of ~$75-80mn assumed
❑ LTM EV/Revenue ~ 28x – 30x (Includes premium) (12 investments from the fund)
and lean business
❑ No direct comparables given business model model Proposed stake for acquisition $mn
Equity value (Avg.) 1,038
4 Trading comps Fund size 950
❑ Policy bazaar only listed insurtech broker in India ✓ Policy bazaar multiples
– trades at an EV/Revenue of ~14-15x
Asset exposure % 8.3%
not applicable since
stock has corrected over
Transaction size 79
❑ Not a direct comparable (different business model
vs Client – Marketplace vs PoSP sales) 50% from its IPO price Stake % 7.6%
✓ Acquisition of ~7.5% stake is proposed

Source: Team analysis, broker reports, Venture Intelligence, YourStory, Kenn

Revenue Drivers and New business opportunities
Ways of exploring new opportunities – growth options

Factors most important in driving the topline Inroads to the future

Insurance advisors on the platform: Client’s unique business model of
onboarding advisors and providing them tools to sell insurance policies Unbundling of the Insurance industry
makes the advisors one of the most important driver of revenue Forward • Claims processing management is a huge B2B SaaS
integration opportunity where Client can use it’s unique
Digital penetration: Growing middle-class & increasing digitization is
positioning and technology to transform the claims
expected to be a huge tailwind for the industry. India is expected to be the
process for both policy holders and issuers.
6th largest insurance market by 2032 @14% 10YCAGR.

Policy listings: Commissions/brokerage is one of the most important

Expanding the playground
revenue drivers for Client which is directly linked to the variety of policies
listed on the platform. International • The marketplace model positions Client to tap the
footprint underpenetrated Tier3/4 market in India which
Valuation Sensitivity requires extensive advisor handholding.

Exit Multiple • International market expansion of SaaS offering (for

1,054 20x 22x 24x 26x 28x 30x FI’s) is a huge business opportunity. With presence in
15% 1,279 1,407 1,535 1,663 1,791 1,918 Middle East (UAE), Client has opportunities in
Southeast Asian markets which have similar industry
20% 1,034 1,137 1,241 1,344 1,447 1,551
IRR dynamics as India.
25% 843 927 1,012 1,096 1,180 1,264
30% 693 762 831 901 970 1,039
Increasing the product stack
✓ Valuation sensitive to both IRR and exit multiples
Diversified • Client’s ability to build a profitable advisor driven
✓ Exit multiple to be driven by profitability metrics & unit economics
Insurance Offering marketplace model opens opportunities in building
✓ IRR realization to be driven by growth adjacent businesses in various financial products
✓ Key to ensure profitable scaling of business & prevent undue expenses/cash burn including commercial Insurance for instance corporate
❑ Expanding advisor network key to sustainable value creation - They bring in more health & fire insurances
revenues & customers while working on commission-based contracts

Source: Team analysis; Client, Venture Intelligence, Crunchbase Most likely Somewhat likely Unlikely
Questions for the founders
Further Diligence points

Company operations & Vision Business Fundamentals Strategy

Team & vision Unit Economics Growth Strategy

• Quality of 2nd level of mgmt – execution • Unit economics across different types of • Applicability of expertise of dense cities in tier
capabilities in tier 2 cities. insurance policies – commissions %, expenses 2+ cities (current expansion)
(actual & attributable) • Plans for expanding and implementing growth
• Vision for the company – IPO vs acquisition?
• Range of commission/ take rates with different in Tier 2+ cities
• Growth plans going forward post the unicorn insurers • How to manage large team of advisors and
status
ensure training in bigger batch sizes?
Operations
Financial History • Exclusivity clause with agents and plans in
• Client’s value proposition for insurance case of backlash?
• Involvement of shareholders in company advisors & retention strategy
direction • Any plans on separate programs to educate
• Tech capabilities and data storage centers? prospective customers in tier 2+ locations?
• Detailed revenue & expenses history with
breakup under majority heads • Data usage and legal reasoning for using big • Response to Bima Sugam and Policybazaar
data entering the advisor PoSP model
• Contingent liabilities and their potential impact
on future revenue (lawsuits, IP) Customer Value Positioning
• Financial Ratios – profitability, solvency, • Differentiation strategy within crowded
• Lifetime value to Customer Acquisition cost
liquidity, turnover marketplace of Insurtech
analysis
• Fund raise plans – Given profitable and • How to shift from impulse/emergency purchase
• Retention rate, activity rate, NPS score
positive cash flow business, do we expect to habitual purchase?
further dilution in the future? • AOV, revenue & frequency pareto for customer
base

Source: Team analysis;

Term Sheet
K e y Te r m s t o b e i n c l u d e d

Offering terms Basic deal details including but not limited to co./investor names, closing date, amount raised, price per share and pre-money valuation
Securities to Issue Instruments shall be compulsorily convertible preference shares (CCPS)
Investment $79Mn for a 7.6% fully diluted equity stake (together with other investors, if any) for Series F round
Liquidation Preference Liquidation amount – 2x original issue price + annual 5% cumulative dividends (assuming conversion ratio 1:1)
Dividend Pro-rata participation in any dividend paid to common stockholders
Conversion Rights Convertible to ccommon stock after 12 months or date of allocation for public investors on 1:1 basis (whichever is earlier)
Vesting Rights Each founder will have staggered 5 years vesting period. In IPO, founders can participate for 20% of their stake, & 50% in year 4 & 5
Anti-dilution Broad based weighted average adjustment to reduce dilution in case of a reduction in valuation
Employee Pool 2% shares will be saved as employee stock option pool
Drag Along Rights Limited to 5x of actual investment made
Tag Along Rights Right to sell at the same price as another investor selling his shares in secondary sale to another investor
Voting rights Entitled to vote together with the common stock on all matters of the organization as-if shares are held on converted basis
Board of Directors Right to appoint 1 director on the Board
Protective Provision Majority and veto approval required in critical decision, for instance, liquidation, business model change, bringing new investor on Board
Information Right Access to quarterly financial statement, annual budget, financial statements, management dashboard & independent legal audit
Participation Rights Right to participate on a pro-rata basis in subsequent fund-raising opportunities

Future Rights The series seed will be given same contractual rights as first series of preferred stock

Non-Compete Restrict the founders and key employees from competition with the same business as Client
Right of First Refusal In case of stake sale by founder, the reservation of the right of first refusal
Co-sale Agreement Right to sell shares, in case other investor group does so (under same conditions)
No Shop Agreement The company & founders agree that they will not share the terms of deal with third party for 30 days from date of acceptance of terms

Source: Team analysis; Venture Strategy, Primary Research

 Team VentureEQ |

Thank You

Appendix
(Link to Excel Valuation Model Working)

10
 Appendix-1
Financial projections

Summary projections
Particulars FY2021 FY2022 FY2023E FY2024E FY2025E FY2026E FY2027E

Operating Revenue ₹ 63 ₹ 99 ₹ 173 ₹ 277 ₹ 444 ₹ 665 ₹ 965

Expenses:
Employee Benefit Expenses ₹ 38 ₹ 42 ₹ 50 ₹ 62 ₹ 79 ₹ 101 ₹ 131
Commission / Distribution Expenses ₹ 12 ₹ 15 ₹ 27 ₹ 42 ₹ 64 ₹ 93 ₹ 135
Website Usage and Ad / Promo ₹5 ₹ 24 ₹ 65 ₹ 117 ₹ 191 ₹ 280 ₹ 385
Other Operating and Admin ₹6 ₹9 ₹ 15 ₹ 24 ₹ 37 ₹ 53 ₹ 77
Total Operating Expenses ₹ 61 ₹ 90 ₹ 157 ₹ 243 ₹ 371 ₹ 528 ₹ 728
EBITDA ₹2 ₹9 ₹ 17 ₹ 34 ₹ 72 ₹ 137 ₹ 236
EBITDA Margin 3.65% 9.43% 9.57% 12.19% 16.24% 20.66% 24.49%

Key assumptions
Particulars Unit FY2021 FY2022 FY2023E FY2024E FY2025E FY2026E FY2027E Remarks

Operating Revenue CAGR % 57.14% 75% 60% 60% 50% 45% <<Benchmarked to growth in Policybazaar projections

Employee Benefit Expenses Difference in Difference 11.11% 11.11% 11.00% 10.50% 10.00% 10.00% <<Retained at historical levels; slight operating leverage assumed with scale
Commission / Distribution Expenses % of Operating Revenue 19.37% 15.35% 15.35% 15.00% 14.50% 14.00% 14.00% <<Retained at industry standards
Website Usage and Ad / Promo Difference in Difference 52.33% 55.00% 50.00% 45.00% 40.00% 35.00% <<Strong organic growth and WOM publicity, network effects of advisor network to enable organic growth with minimal promotional spends
Other Operating and Admin % of Operating Revenue 8.84% 8.78% 8.78% 8.50% 8.25% 8.00% 8.00% <<Retained at historical levels; slight operating leverage assumed with scale

Source: Team analysis;

 Appendix-2
Valuation workings

1. Discounted exit value

Particulars INR cr 2021 2022 2023E 2024E 2025E 2026E 2027E

Revenue ₹ 63 ₹ 99 ₹ 173 ₹ 277 ₹ 444 ₹ 665 ₹ 965
EBITDA ₹2 ₹9 ₹ 17 ₹ 34 ₹ 72 ₹ 137 ₹ 236

Exit_Multiple
EV/Revenue Min 25
Max 30
Future EV (INR cr) Min 24,116
Max 28,940
Target IRR 25%
Target MOIC 3.05
Present EV (INRcr) Min 7,902
Max 9,483
Present EV ($mn) Min 1,054
Max 1,264

Source: Team analysis;

 Appendix-2
Valuation workings

2. VC Method
INR cr 2022 2027 CAGR Remarks
India_insurance premiums 9,87,696 19,01,724 14%

Share of Digital channel 4% 10% <<Based on Jefferies study & china data
Digital premiums 1,90,172

Market share of Turtlemint_now 9% 5% <<Market share decreases due to insurers developing own capabilties and emergence of digital first insurers
Premiums through turtlemint 9,509

Commission% share on premiums 8% <<Compression in premiums due to competition & substitutes

Total_commission income 713.15
EV/Rev multiple 25

Particulars INR cr $ mn
Future EV 17,829 2,377
IRR 25%
Present_EV 7,303 974

Note: Upper end calculated with 30x exit revenue multiple

Source: Team analysis;

 Appendix-3
Transaction comps
Figures in $mn
S.No. Date Target Acquirer Funding Valuation Revenue EV/Revenue (LTM)
Apr-22 Turtlemint Amansa, Nexus, Jungle ventures 120 900 13.2 68.2 <<Turtlemint's latest round (Series E)

1 Mar-21 Turtlemint Jungle, GGV 46 222 8 28.2

2 Nov-20 Turtlemint GGV, Sequoia, Trifecta 30 176 6 30.1
3 Mar-21 Policy Bazaar Multiple investors 45 2400 111 21.6
4 IPO Policy Bazaar Multiple investors 761 5506 138 40.0
5 Jul-20 Policy Bazaar Softbank 50 1500 99 15.1
6 Nov-19 Policy Bazaar Tencent 150 1400 62 22.8
7 May-18 Policy Bazaar Softbank 200 1000 42 24.0
8 Jun-21 Renewbuy Apis 45 146 6 23.4
Mean 25.6
Median 23.7

Premium for Turtlemint 20%

30.8
28.4
Implied_EV 711
657

Source: Team analysis;