UK-based insurtech startup Marshmallow has raised $90 million in fresh funding to expand its services beyond car insurance, targeting immigrants and underserved communities. The round, led by Portage Capital, values the company at over $2 billion, more than doubling its previous valuation of $1.25 billion in 2021.

Marshmallow has made a name for itself by using data science to build car insurance policies for immigrants and other consumers who have been overlooked or priced out of traditional insurance. With a million drivers insured and a profitable annual revenue run rate of $500 million, the startup is now looking to move into financial services, including lending and home insurance.

CEO Oliver Kent-Braham believes that migration presents a huge opportunity for the company. "We need migration to put more people into work, and we want to help people move and integrate into the UK," he said in an interview. Marshmallow plans to launch its first lending product later this year, en route to building a "one-stop shop" for everything financial and insurance that a new arrival to the UK might need to adjust to life.

The funding round is roughly split 50-50 between equity and debt, according to Kent-Braham. Previous backers of the company include Passion Capital, Investec, and Scor. Marshmallow has raised around $220 million to date.

The startup's growth has been considerable, with the number of insured drivers increasing from 100,000 in 2021 to 1 million today. Marshmallow's pink outdoor ad campaign in cities like London has also helped raise its profile.

The funding comes at a complex moment for insurance startups in Europe. WeFox, another insurtech startup, has fallen on hard times despite its $4.5 billion valuation in 2023. However, there are also brighter signs, such as Ominimo, a Polish startup that recently raised $10 million at a valuation of over $200 million. Like Marshmallow, Ominimo started with car insurance and is using AI to rethink actuarial formulas and make new inroads into risk prediction.

Marshmallow's focus on inclusivity and diversity sets it apart from its competitors. The startup's leadership, including CEO Oliver Kent-Braham and his identical twin Alexander, is rare in the tech industry, with only 3% of startups with valuations of over $1 billion having Black founders. Marshmallow's investors see particular strength in its diverse leadership, with Devon Kirk, GP and co-head of Portage Capital Solutions, noting that "financial services benefits from different perspectives and leaders coming up with innovative solutions to address those needs."

As Marshmallow expands into new services, it will be interesting to see how it navigates the complex landscape of financial services and insurance. However, with its strong technology story and commitment to inclusivity, the startup is well-positioned to make a significant impact in the industry.