European cyber insurance startup Stoïk secures $27 million

Cyber ​​risk is becoming an increasingly necessary issue for small businesses around the globe. While many corporations strive to avoid and minimize cyber threats, they rarely discuss transferring these risks to a 3rd party.

This is why Stoic enters with a cybersecurity insurance product designed specifically for small and medium-sized enterprises. The French startup recently raised a Series B round value €25 million (about $27 million at current exchange rates).

In many respects, Stoïk follows within the footsteps of corporations corresponding to Coalition AND And Zatoka. But as a substitute of selling its insurance products to U.S.-based corporations, Stoïk focuses exclusively on European corporations.

Businesses insured by Stoïk are protected against cybersecurity claims. For example, if an organization has to halt production or temporarily close as a result of a cyber incident, Stoïk can compensate for the lack of revenue (gross operating margin) during this era.

Stoïk currently covers corporations with an annual turnover of €750 million or less and offers insurance limits of €7.5 million. Currently, the corporate operates in France, Germany and Austria.

The startup selected this particular industry because cyber insurance is more complex than other forms of insurance products. Stoïk has also built a small internal crisis management team to answer incidents and assist with data recovery and crisis communications.

“Since the beginning of the week, we have had over a dozen attacks on our portfolio, including one serious one,” co-founder and CEO Jules Veyrat told TechCrunch last week. “In the Lyon region, we mobilized people following a ransomware attack that brought an industrial company to a standstill.”

Once customers join, they are going to receive an outline of their cyber risk exposure. The startup monitors DNS records and scans online databases for password leaks related to a client’s domain name. Stoïk also can perform internal scans to recommend changes to cloud and Active Directory configurations.

“Our thesis is that we’ll insure corporations. Moreover, we’ll help them higher protect themselves against cyberattacks. This way they’re pleased, they get more for a similar price and we’re pleased because now we have policyholders who’re well protected and due to this fact have fewer claims than others,” Veyrat said.

Stoïk still has some similarities with the broader insurance industry – it have to be careful not to simply accept too many bad apples into its client portfolio, as this might significantly impact the corporate’s loss ratio.

“The task of insurers is to select risk. So who do I accept and under what conditions? How well do they understand cybersecurity?” – Veyrat said. “In other words, am I willing to take on a €50 million industrial company that has no offline backup strategy? This is just an example, but we ask ourselves such questions every day.”

Stoïk serves as Managing General Agent (MGA), which implies he works with insurance and reinsurance corporations on their risk coverage. Stoïk can create its own rates, products and policies, however it outsources risk to larger insurance corporations.

One of such partners is Tokio Marine HCC International, which is the one latest investor within the Series B financing round. Current investors also invested within the round. Alven is leading the Series B round, which also includes Andreessen Horowitz, Munich Re Ventures, Opera Tech Ventures and Anthemis.

Stoïk doesn’t sell its insurance products on to its customers. Instead, it really works with third-party insurance brokers who already work with small and medium-sized businesses. So far, Stoïk has acquired 1,000 insurance brokers.

By the tip of 2024, Stoïk must have 5,000 policyholders. It currently represents €25 million in premiums and plans to extend customer registrations in the long run. The startup plans to expand to a brand new country yearly, starting with a brand new European market in late 2024 or early 2025.