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Insurance start-up Marshmallow becomes Britain’s first Black-owned unicorn

Insurance start-up Marshmallow becomes Britain’s first Black-owned unicorn

07 Sep 2021

Marshmallow co-founders Alexander and Oliver Kent-Braham.


LONDON — Billion-dollar start-ups are hardly a rarity anymore, with data firm CB Insights listing more than 800 privately-held tech firms worldwide with a valuation of $1 billion or more.

But Marshmallow, a London-based digital insurance platform, is as rare as they come. Founded in 2017 by mixed-race identical twins Oliver and Alexander Kent-Braham, it’s the first Black-owned company in Britain to reach the coveted status of “unicorn.”

“We were pretty surprised by this fact,” Oliver Kent-Braham, Marshmallow’s CEO, told CNBC in an interview.

It reflects an ongoing lack of diversity in the tech industry. In the U.K., just 1.6% of venture capital funding went to all-ethnic founding teams between 2009 and 2019, according to Extend Ventures, while only 0.2% of funding went to Black entrepreneurs.

Kent-Braham thinks the venture capital mindset is to blame. Many tech investors ignore cold emails and only back founders they know through colleagues, he said.

“VCs really need to look a bit broader,” the 29-year-old entrepreneur told CNBC.

“The number of times a VC said: ‘I wouldn’t respond to cold emails because you should be able to hustle and intro to me.’ It’s much easier to hustle and intro to you if you went to your university and you know a ton of people that know you.”

Kent-Braham’s firm, Marshmallow, raised $85 million in a funding round valuing the company at $1.25 billion. The cash came solely from existing investors, including Passion Capital, an early investor in digital bank Monzo, as well as South African bank Investec and French reinsurer Scor.

The Kent-Braham brothers still control most of the business following the latest investment round. The pair co-founded Marshmallow with software engineer David Goaté, who they previously worked with at London start-up Yoti.

Insurance goes digital

Marshmallow is a digital-only insurance provider. The company got its start offering car insurance mainly to expats whom, it says, often face higher charges from traditional insurers.

The firm, which is authorized by the U.K.’s Financial Conduct Authority, touts its use of machine learning to tailor policies for customers as a key advantage over incumbents in the industry like Admiral and Axa.

“We try to use more data than our competitors to underwrite people and then to digitize everything,” Kent-Braham said. “We need to hire about half what our competitors need to hire to support customers. We believe we’re really well-placed to take market share.”

With more than 100,000 customers now signed up, Marshmallow plans to launch other products and expand throughout Europe.

The insurance technology, or insurtech, market has seen a surge of investment this year after the Covid-19 pandemic accelerated a shift in consumer behavior toward online services.

Zego, a U.K. commercial motor insurer focused on the gig economy, raised $150 million at a $1.1 billion valuation in March. Wefox, a German insurance start-up, bagged $650 million in a June investment round valuing the company at $3 billion.

Marshmallow’s fundraising also highlights the flood of capital flowing into Europe’s tech industry lately. European tech firms have already raised more money this year than they did throughout the whole of 2020.