North East tech business, honcho, is turning to crowdfunding after EU funds allocated to support the launch of its new app designed to reduce costs for young drivers, were put on indefinite hold.
honcho, which will create the UK’s first ‘reverse auction’ market-place for car insurance, thereby reducing costs for motorists and decreasing the dependence on price comparison websites (PCWs), has launched its fundraising exercise on CrowdCube.
The app enables insurers to bid for consumers’ business, competing with each other to offer the best value package in real time rather than just endless fixed quotes like PCWs.
Unlike price comparison websites, which charge insurers large commissions, insurers pay honcho just £1 for the right to bid, thus enabling them to reduce premiums for consumers.
honcho turned to crowdfunding when it became apparent that funds from the European Investment Bank (contributed to by all members of the EU), would not be released for the foreseeable future.
Rather than delay the launch of its innovative and disruptive Insurtech app, the team at honcho approached CrowdCube to help them realise their ambitions and objectives, and to offer UK investors the chance to take a stake in the company.
The campaign aims to raise £650,000 to help bring the app to market.
Gavin Sewell, CEO of honcho, believes that crowd funding will be a vital source of capital for many new and expanding businesses after Brexit. Sewell comments:
“Businesses cannot afford to wait for political negotiations to decide if funds allocated to UK regions will be released. The JEREMIE 2 fund alone was meant to invest £120 million into businesses such as ours, and this was only one of the funds targeting regions of the UK meaning that potentially thousands of businesses are losing out.
“Crowdfunding is the logical and immediate solution for innovative tech start-ups such as honcho looking for alternative funds, and also gives UK investors the chance to support enterprises and get in on the ground floor of exciting new ventures.”
Through the CrowdCube platform, investors, both large and small, can take a stake in honcho, which promises to revolutionise the insurance market by flipping the current price comparison market on its head.
honcho will act as a ‘matchmaker’ between customers and insurers, initially for car insurance, but ultimately across a range of other insurance products and markets. The app enables insurers to bid for consumers’ business, and compete with each other to offer the best value package in real time rather than merely providing endless pages of fixed quotes that very few people actually need or read.
Unlike the price comparison website business model, fees are totally transparent (insurers simply pay £1 for the right to bid and can enter as many bids for a particular customer as they like for this fee), therefore insurers are incentivised to consider ways to bring premiums down in order to win consumers’ custom.
By saving insurers costs on commissions and the fees charged by price comparison sites (which can be £60 or more for a single policy), savings can be passed on to customers, helping to further drive down prices for policies.
“We believe honcho can revolutionise the insurance market,” says Gavin. “It benefits both customers and insurance companies, helping to end the blight of spiralling insurance costs which are causing misery for many, especially young motorists.
“We believe that through crowdfunding, our future customers have a chance to take a stake in a company that will make their lives better as well as hopefully offering a healthy return on their investment.”
honcho is the first online reverse auction marketplace for financial services, which will revolutionise the way people buy products and services, saving them time and money. honcho is due to launch into the car insurance market in 2018.