Deal Memo – KOBA Insurance (August 2021)

NameKOBA Insurance
AboutTech-enabled pay-per-km car insurance in Australia
HeadquarterMelbourne, VIC
Raise DescriptionSeed
Security TypeFully paid ordinary shares
Current Round Size$1,000,000
Pre-Money Valuation $11,212,500
Current Price per Share$1.00
Previous Raise StagePre-seed
Previous Raise Valuation$8,000,000
Crowdfund PlatformBirchal
Existing InvestorsFounders’ capital
Angel Investors
Insurtech Gateway
Hunter Equity Group
Key CompetitorsSuncorp
Insurance Australia Group
Allianz Insurance
QBE Insurance
Related Webinars

The Startup Investigator Scorecard

Characteristics of Good Problem:19/ 3063.3%
Characteristics of Ideal Solution:18/ 2572.0%
Traction to Date:13/ 2065.0%
Business Model Defensibility:12/ 2060.0%
Chracteristics of Founding Team:16/ 2564.0%
Total Overall Score:78/ 12065.0%
Overall Scorecard
Peter Thiel 7 Questions (Product):24/ 3568.6%
Berkus Method (Risk):14/ 2556.0%
Supplementary Scorecard

* See below for further details of evaluation


KOBA Insurance is a startup providing tech-enabled pay-per-km motor insurance in Australia. It is targeting the motor insurance market for less frequent drivers i.e. FIFO workers, people with work from home arrangement etc. According to KOBA Insurance, drivers travelling less than 7000km per year could save up to 25% on existing fixed comprehensive car insurance if they use its product. Instead of using the existing pay-as-you-go model in the market, KOBA Insurance is using a tech-enabled solution to provide a true seamless pay-per-km motor insurance experience. It is currently in the beta testing phase, and expected to do a public launch in October 2021. The current crowdfunded capital will be used to fund the “Product Fit” phase where it aims to acquire its first 1,200 customers for an annual recurring revenue of $1,000,000. The phase will also be used to prove its business model and insurance thesis.

KOBA Insurance Business Canvas (Link to PDF Copy)

Unique Approach to the Pay-as-you-drive (PAYD) Insurance Model

Instead of using the existing pay-as-you-drive model, KOBA Insurance has developed a tech-enabled solution, leveraging the IoT technology already available in most cars to provide a true, seamless pay-as-you-go insurance solution.

How does it work?
It developed a device called KOBA Rider, which can be plugged to the on board diagnostic (OBD) plug of a vehicle. OBD is a vehicle’s built-in self diagnostic system.

By connecting the KOBA Rider to the OBD and to the KOBA smartphone app, in-vehicle data such as vehicle GPS coordinates can be logged and streamed through the cellular network to the cloud. The data is then processed and presented live through the KOBA smartphone app to the vehicle owner. This way, relatively accurate KMs travelled can be measured and used to calculate the monthly driving premium of the insurance.

This approach also opens up opportunity for KOBA to get access to other in-vehicle data permitted by the user to offer personalized, value-added services such as vehicle locator, digital mechanic self-check, dynamic maintenance plan based on vehicle condition etc. See below a list of features in the product roadmap for KOBA.

These services are key to the overall business strategy and potential secondary revenue streams that will supplement the low-er margin motor insurance business.

A Team of Seasoned Digital Operators and Motor Insurers

Andrew and Erica are seasoned digital marketers having run digital teams and agencies respectively for huge brands such as Reckitt Benckiser, American Automobile Association (AAA), Toyota, Nissan and Volkswagen Group. Andrew’s most recent experience with AAA was where he got the inspiration for KOBA Insurance. Alongside the founders, the team consists of seasoned operators in the motor insurance industry – Nick Bell, the Head of Insurance Product & Underwriting has worked for various car insurance brands in Australia in the past 15 years, Don Rossell who is the Senior Adviser for KOBA Insurance helped launch Toyota Aloi Insurance and help grew the business to $200m GWP in 6 years. The team is also supported by a group of impressive advisors in the pay-as-you-drive industry such as Max Brunner (Metromile), Robert Lumley (By Miles) and Nathan Anderson.

KOBA Insurance is Pre-revenue, but Expected to Launch October 2021

KOBA Insurance is pre-revenue, which means it has not proven its product-market fit as there are no paying customers yet to justify the business model. However, it has developed a working prototype that is going through beta user testing and is expected to launch in October 2021 if no major issues are uncovered in the beta test. See below the planned phased approach for KOBA Insurance.

The crowdfunded capital will be used to fund the “Product Fit” phase to establish product-market fit and prove the insurance thesis that low usage drivers get into less accidents. At this stage, there are still considerable risks in whether the business plan will work. After all, we have seen other telematic-based, pay-per-usage insurance products like “Insure the Box” (QBE) and Ubicar (RACWA) failed in the past, and are now defunct.

High Retention Rate in Traditional Vehicle Insurers in Australia

The other potential challenge for KOBA Insurance is the fact that the retention rate of customers in traditional vehicle insurers in Australia is really high (~75%). This is mentioned in KOBA’s offer document, based on the experience of the team. This sentiment is also echoed by Carolyn Batterton from UbiCar in a press release in 2019. According to her, “They (consumers) just don’t change insurers so a lot of insurance companies don’t have to try that hard.”1 Whether it has changed over the last few years, especially with Covid-19 impacting household income is not clear.

What is encouraging though is the fact that the KOBA business model has a very clear value proposition and is backed by a team of seasoned digital marketers and insurance operators. Hence, the bet is whether the product is able to function as advertised and whether the team can convince the target market to switch over.


Overall, KOBA Insurance is well placed to execute its “Product Fit” phase, supported by a strong team, with an innovative solution and relatively good timing i.e. tail-end of Covid-19 (fingers-crossed). Its pre-revenue diluted valuation of $11m is fair and supported by extensive research and baselining (see below document). If you are comfortable in the associated risks mentioned above and in the offer document (attached below) when investing in pre-revenue startups, then this might be a good opportunity to invest in a “smarter insurance”.

1 Car insurance costs hit customers who automatically renew

Thanks for reading. Feel free to let us know what you think about the company and crowdfunding campaign in the comment box below! 🙂

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The Startup Investigator

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