Car insurance app exceeds crowdfunding target by a third
Following a successful crowdfunding campaign, a new app will be launched to reduce insurance costs for motorists. The honcho team closed the investment window early following the huge support received for its innovative and disruptive proposition. The team at honcho approached the crowd-funding platform CrowdCube in late November to offer UK drivers and investors the chance to take a stake in the company, after EU funds allocated to support the launch were put on indefinite hold.
A conditional investment of £150,000 was made from the Finance Durham Fund, managed by Maven Capital Partners, pending a successful crowdfunding campaign.
By 5th January and with nine days of the campaign remaining, the £650,000 target had been reached. The final amount raised stands at £850,000 following investments from 713 CrowdCube investors.
Gavin Sewell, CEO at honcho, commented: “We are delighted to have raised significantly more than our target and to now be able to make progress on the next phase of the honcho project. The support we have received since the launch of the crowdfunding campaign has been phenomenal and we are thrilled to have secured investment from numerous CrowdCube investors, including one of the UK’s most active private equity houses and SME finance providers, Maven Capital Partners.
“We couldn’t be happier with how well the crowdfunding campaign has been received. It is a great example of how businesses can use alternative funding in the absence of investment from the EUI sources.
“honcho will be a great asset to the UK consumer insurance market and revolutionise the industry for drivers, in particular young motorists who face real challenges in securing a competitive deal.”
Frank Speight, Commercial Director at honcho, added: “The honcho campaign has been successful in not only reaching, but exceeding its initial target investment by a third – securing a total of £850,000, with funds from 713 investors.
“In addition, thanks to the exposure generated by the capital raising exercise, several new insurers and brokers have contacted us with a view to participating in the honcho initiative.”
In a bid to compete with price comparison websites (PCWs), whose prices are usually inflated as a result of insurers passing the cost of being listed onto consumers, honcho will create the UK’s first ‘reverse auction’ marketplace for car insurance.
Unlike price comparison websites, which charge insurers large commissions, insurers pay honcho just £1 for the right to bid as many times as they like for a single customer, allowing them to reduce premiums for drivers and incentivising them to do so in order to win their custom.
By reducing commission costs for insurers and the fees charged by price comparison sites (which can be £60 or more for a single policy), savings will be passed on to honcho customers, to further drive down car insurance premiums.
honcho will act as a ‘matchmaker’ between customers and insurers, initially for car insurance, but ultimately across a range of other personal insurance products (such as home and pet) and markets.
Sewell continued: “We believe honcho can revolutionise the insurance market. It benefits both motorists and insurance companies, helping to end the blight of spiralling insurance costs which are causing misery for many.”
honcho claims to be the first online reverse auction marketplace for financial services, which will revolutionise the way people buy products and services, saving them time and money. honcho is due to launch into the car insurance market in 2018.