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Car & Health Insurance Will Be 50-60% Of The Online Lead Generation Business In India – Yashish Dahiya, CEO, PolicyBazaar

eTech Aces yesterday announced that they’ve raised 49 percent stake from Info Edge India (Naukri), for Rs. 20 crores. Yashish Dahiya, CEO of eTech Aces (PolicyBazaar) has been in the online insurance business before – he was the CEO of First Europa, a Global Online Insurance Broker with operations in 9 countries, prior to which, he was the MD of ebookers Plc. MediaNama spoke to Dahiya about eTech Aces’ fund raising and growth plans:

Why did PolicyBazaar raise money from a strategic investor, instead of a financial investment from VCs? Wouldn’t it have been better to take financial investment now, and then a strategic investment at higher valuations?
For a few reasons – over time we will be applying for our own insurance brokerage license. There are restrictions on foreign investment there – that was one reason for going for a domestic company. Number two – I’ve been a manager all my life. I think an investor has a very different view to things, than an executing entrepreneur. When we started looking for an investor, within a week we had narrowed down on Naukri. They have a lot of experience, and we’ve already gained from the discussions with them.
But you’ve sold them a very high stake – wouldn’t selling 49 percent hinder further fund-raising? Does Info Edge have an option to acquire 100 percent?
I envisage taking this company public over the next 5 years, and I don’t think we’ll need more funding than the amount we’ve raised already.
Why take funding at all?
We’re not yet a profitable entity, and we needed a larger investment. We’re going to have physical offices in around 12 cities by the middle of next year. First we’re after NCR, and then southern cities. All that will require operating cost funding.
What kind of revenues does the company have? How many policies do you sell in a month?
I’d prefer not to talk about those details at this point in time.
Are you looking at only a lead generation model, or will there be more revenue streams?
We’re looking primarily at lead generation. However, eTech Aces also passes leads to brokers. We’re not the brokers, and do not close the transaction, and we never get the insurance premium. We will focus on the insurance business for now. My view on the lead generation business is that over the next 5 years or so, we will see car and health insurance emerging as 50-60 percent of the lead generation business. This is based on what takes place in the UK and the US markets. In UK, cars are a very large segment, and health in the US. For example, MoneySupermarket is a site for all products, but 50 percent of their sales is car insurance. We will also get into loans, but later.
What is your biggest challenge?
Volume is the toughest bit. This is an industry shift, so online will take time.
How do you get the volumes?
We’re starting a radio campaign, followed by certain offline activities. We do a lot of search marketing. The global trend is that the online Insurance business is lagging the online travel business by around 2 years. So we are partnering with travel websites, for setting up insurance segments. These will be white labeled deals.
What are your margins on online marketing?
At present, revenue generated through online marketing is about 3-4 times the marketing cost. That’s given us confidence to get behind this model. There is an offline component to this business: Companies contact us for insurance comparison, for quotations, and we pass the leads on to companies. But in the end it’s all web generated, even though the fulfillment happens offline.

Disclosure: I own an inconsequential number of shares of Info Edge India

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