Aussie car insurance startup Koba Insurance raised $500,000 in its first day of crowdfunding, showing the potential of alternative capital raising for the local startup community.
Founder Andrew Wong told Information Age the crowdfunding model makes perfect sense as it draws capital from the kinds of people he expects will use Koba come launch.
“We have a consumer business,” he said. “Everyone has a car and everyone needs car insurance, so why go to just one investor when can go to 500 and get the same money?” Wong told Information Age.
“We’re looking for an audience of early adopters, people who are into disruptive tech, who are looking for something new and want to give the underdog a chance.”
Koba is a car insurance company that charges its customers based on how far they drive. Users plug a small device into their car’s on-board diagnostics (OBD) port which tells the app how far the car has travelled and charges their insurance accordingly.
It’s a concept that has worked successfully in other markets and is one that the startup hopes will interest Australians when it launches in October.
Koba’s capital raise has been run through crowdfunding platform Birchal where anybody can put cash in and own shares in the early-stage company.
Birchal integrates similar tiered rewards as other crowdfunding platforms like Kickstarter.
These rewards range from free distance covered using the app, to beta testing and early access, all the way up to a track-day experience with a professional racing driver.
Wong said the advantage of crowdfunding for a business like Koba is the early engagement with customers who begin taking ownership of the product in different ways.
“I’ve spent a bit of time in corporate business and there is often this message about bringing the consumer to the heart of everything you do,” Wong told Information Age.
“And what better way to be true to that than to bring shareholders who are customers to your business from day one?
“Rightfully and wrongfully, professional investors will give advice about how to make more money, not necessarily give advice about how to make the product better.”
ACS Innovation Labs
Koba is part of ACS’ Innovation Labs and is headquarted in Bay City Labs in Melbourne.
ACS Director Scaleups and Innovation Labs, Siobhan Casey, said Koba was another important example of Australian technology entrepreneurship.
“Koba’s crowdfunding success is not a surprise. Koba’s business is a great combination of product, founder and team talent and focus on customer,” she said.
“ACS’s Bay City Labs is thrilled to work with Aussie tech businesses like Koba, who use tech to solve a novel challenge. We look forward to continuing to help them scale”.
Wong said his involvement with ACS’ accelerator program has been “fantastic”.
“We have great access to the all the people, talent, and resources we could need,” he said.
“We have a great relationship with all the Innovation Labs and have been welcomed with open arms at Brisbane’s River City Labs where we’ve flown to for pitches and other sessions.
“As we connect more, we really hope to activate the ACS community. It’s made up of digitally native, tech-enabled people. They get tech, they get data, and are not scared of things like tracking and connectivity.”
Potential concerns around data use and tracking software are issues that Wong has already thought about deeply. He knows there could be misgivings about how Koba collects and uses its customers' data.
“We only use the GPS and mileage information to determine your insurance price,” he said.
“We’re taking a strong stance that all data collected belongs to customer – that’s something we’re setting up from a legal perspective.
“So if a third party asks for data to clear up a claim, it’s the customer who gets to choose how they share their data.”