UK’s Unicorn Startup Marshmallow Raises $90 Million to Fund its Expansion Plans

UK unicorn startup Marshmallow has raised $90 million to finance its expansion. According to UKTech News, the funding is a mix of equity and debt financing. The tech startup raised the funds at a $2 billion valuation.

The Migration Opportunity

The British insurtech startup offers insurance services to UK migrants. The UK had 1.2 million migrants in 2024 alone. Marshmallow’s insurtech success is demonstrated by the wide customer base it serves. Its 2023 accounts show that the company has insured more than one million drivers. It also grew its annual turnover by 75%.

“We think of migration as a huge opportunity. We need migration to put more people into work, and we want to help people move and integrate into the UK,” Marshmallow CEO Oliver Kent-Braham said.

The UK tech startup sees this integration as critical in enabling migrants to drive insured vehicles in the country. The startup also plans to facilitate home insurance purchases and access to loans for migrants. The company plans to introduce its initial lending product by the close of 2025 as it moves towards establishing a one-stop shop for financial and insurance products that anyone moving to the UK needs to adjust their lives.

Marshmallow’s $90m funding will enable the tech startup to launch financial services and expand its insurance product range to appeal to a larger population internationally.

Gradual Growth

Marshmallow is Britain’s first black-owned unicorn. The company has raised about $220 million since its founding. It gained its unicorn status after completing an $83 million Series B funding round in 2021 and grew its customer base to 100,000 people.

Today, the startup has built a wide customer base in cities like London where its pink outdoor ad campaign has seen more than 1 million migrants sign up for its products. The tech startup plans to provide people who move to other countries the same services it offers UK migrants.

“Our ambition is to become a one-stop-financial-shop for newcomers so they feel as though it’s easy to move to, and live in, a different country. There are still major financial services barriers that make it harder for newcomers to settle and take part in everyday life. This funding gives us the capital to solve these problems and deliver against our mission,” Kent-Braham added.

The latest funding round was led by Portage Capital Solutions with participation of Columbia Lake Partners and BlackRock. The insurtech startup has previously been backed by Investec, Passion Capital, and Scor.

“Marshmallow is a clear leader in innovating to solve important financial challenges for consumers. We are confident in the business’ ability to continue developing solutions for a fairer financial ecosystem, and we are excited to support this strong team as it enters its next stage of growth,” Devon Kirk, General Partner at Portage Capital Solutions said.

Industry Complexities

Marshmallow’s insurance solution is built on the ideals of diversity and inclusivity. At a time when the US government is dismantling diversity, equity, and inclusion programs, investors see Marshmallow’s approach to targeting customers as a major strength.

“We think of financial service benefits from different perspectives and work with leaders coming up with innovative solutions to address those needs,” Kirk added.

Even so, the latest Marshmallow financing comes at a time when insurance startups are facing complexities in Europe. On one hand, the region has had some successes in setting up sustainable insurtech companies, an aspect that is capturing investor interest.

But some grim stories have also rocked the region, particularly those associated with the fall of WeFox, a startup that was backed by Salesforce, SoftBank, Omers, among others. WeFox valuation rose to $4.5 billion by the end of 2023. However, the insurance startup recorded losses for years and struggled with its broker-based business model. These issues led to its fall. The insurtech company has been relying on lifeline funding and selling sections of its business to survive.