Germany is known to be a leading automotive and insurance hub. More than 500,000 people work in the insurance industry in Germany. This is further topped by the automotive industry which counts more than 800,000 employees and has generated roughly 426 billion Euro in total sales in 2018. One city that combines both industries is Munich. It is not only a leading insurance hub with more than 32,000 employees but also home to big automotive companies and suppliers such as BMW and Bosch.
It is not by chance that Ayan, Co-founder and Chief Product Officer, and his team decided to explore Munich as a potential starting point for the European expansion of their startup Kruzr. Kruzr’s Mobility Platform provides AI solutions to insurers and mobility companies to improve driving safety, and generate actionable insights to create new services and products. “Our product can be used in various settings. By delivering an engaging preventative driving safety solution to their customers, insurance companies, for instance, are able to improve their risk model and offer premiums to their customers,” says Ayan. One of the new customer segments for Kruzr have been micro-mobility fleet companies. “We have all seen scooters standing and laying all across cities. We support our customers to improve their compliance with existing regulations and at the same time contribute to road safety,” Ayan further highlights.
After Ayan and his team had founded their company in Bangalore (India), they realised quickly that they had to work with road insurance and automotive companies. “We reached out to companies in Germany as it is known to be a hotspot for the automotive and insurance industry and got a good response from various German companies,” says Ayan. “Our entrance in the German market was eased by the fact that there is a strong awareness on road safety,” he further outlines.
Since 2017 Kruzr has been successfully operating out of Munich. Their entry into Germany was facilitated by GINSEP and its partners. “We came in touch with GINSEP during the YourStory TechSparks event. GINSEP helped us to identify different ways to access the German market. Consequently, we identified the InsurTech Hub Munich Accelerator as the key programme to start our business in Munich. GINSEP also helped us to connect with Invest in Bavaria who helped us with legal matters and the travel,” Ayan highlights. Unlike most stereotypes German was not the biggest challenge Ayan and his team faced in Germany. “The biggest challenge is the German bureaucracy. InsurTech Hub and Invest in Bavaria helped us a lot to do business from a legal standpoint but the moment you move out of this ecosystem, processing your documents becomes difficult,” Ayan points out. In his view digitising the German bureaucracy would help easing doing business in Germany significantly.
When asked what advice Ayan would give startups that want to expand to Germany, he responds: “Especially with Covid, startups should ensure that they have an established market interest in terms of already having customers interested in the product and only then move their business or create a branch in Germany”.
In 2019, Kruzr raised $1.3 million in its first round of seed funding and since then has focused on developing a strong market fit for the European market. “Our technology has matured in the last two years and we are able to cater to various industries beyond automotive and insurance such as logistics and shared mobility,” says Ayan. The insurtech startup is currently focusing on its growth path and is onboarding large clients in Germany, the Netherlands and Norway. “We also recently started experimenting in the US market,” Ayan further highlights.
“Like other industries, we have also faced the consequences of the Corona pandemic. Some of the key challenges we experienced related to a slowdown in decision making and budget release. However, Europe and especially Germany is recovering fast,” Ayan points out when asked regarding the impact of the Coronavirus. Since September Kruzr’s order books are filling up again and they are witnessing a steady increase in business activity. But even markets that are slower recovering than Germany such as the US and the UK present an opportunity for the startup. “A lot of customers are asking their insurance companies for more flexible car insurance premiums since car travel has significantly reduced since the outbreak of the pandemic. Jointly with our partners, we are currently exploring to develop mileage or usage-based solutions that provide customers more flexible insurance packages,” Ayan mentions.
Looking back at their expansion journey, Munich has been the right choice for the startup. “From a personal point of view, I like smaller cities like Bonn more. However, Munich offers connectivity, quality of life and the right industry access for us,” Ayan mentions. “However, if I could give the German government a suggestion then I would ease the visa and registration process,” he further highlights. Indeed, strict visa regulations are one of the biggest bottlenecks international startups are facing when considering Germany as a business destination. “Because of visa restrictions, we just had three months to validate our business and then had to go back to India for a three months so called cool-off period. A lot of discussions went sore during this time,” Ayan says. If Germany wants to become an internationally recognised startup hub, startup visas as countries like the UK are offering are the need of the hour.