In a world increasingly under the threat of cyberattacks, Berlin’s Baobab has just raised €3.5 million in a pre-seed round to help protect Europe’s SMEs from existing and emerging attacks.
The funding was led by Project A Ventures with participation from La Famiglia, Discovery Ventures and several angel investors such Christopher Oster and Marco Adelt (Clark), Michael Riegel (Comtravo), Hanno Fichtner (Gabi), Emilios Markou and Alexis Pantazis (Hellas Direct), Philippe Mota and Jan Beckers (Bit Capital & Ioniq).
Combining tech with knowledge, Baobab is pioneering a new approach to protecting organizations from existing and emerging cyber threats that integrates cyber security with insurance. Founded in 2021, the aim is to make SMEs more resilient in the face of cyber risks.
The demand for cyber insurance is growing globally. Attackers have vulnerability discovery and are increasingly targeting SMEs which are rarely insured against cyber threats such as ransomware, DDOS and data breaches. Hackers have also benefited from the fact that in the last 24 months, a large number of business processes have been digitized and hybrid work models have been established across the board, opening the door for more attacks.
What makes the startup stand out is that it helps clients prevent network exploits before they happen – avoiding losses for the company and reducing insurance payouts at the same time.
Vincenz Klemm, Co-Founder of Baobab, said: “Losses from cybercrime are projected to hit $6 trillion globally in 2021, up 100% from 5 years ago. Evaluating the risks posed to a company’s system is the biggest challenge for any SMEs. That’s why Baobab not only insures SMEs against cyber risks but at the same time provides protection and monitoring against attacks. Our incentives are aligned with the customers as our insurance has to pay out if our risk mitigation does not work.”
Baobab insures companies against damages caused by cyberattacks such as business interruptions, liabilities and service costs. On top of that, Baobab reduces risks by assessing potential threats, providing attack surface management as well as continuous monitoring and vulnerability checks to protect customers from further exposure to hacks. The tech used by the startup optimizes risk selection, pricing, and mitigation using machine learning models that optimize for better loss ratios.
The company is developing the product in close collaboration with brokers to also support them in better explaining cyber threats to their customers.
Klemm also stated: “We want to empower insurance brokers to be better able to advise their clients on their individual risk exposure so that companies are not left alone with cryptic vulnerability codes, but instead are provided with actionable remediations to enhance their cyber security posture.”
The new funding will fuel the company’s launch in Germany early this year before it enters into other European markets. It will also be used to hire insurance professionals as well as technical and cyber security experts – putting knowledge and experience at the front-line defence of cyberattacks.