The timing couldn’t be better for Baobab, the Berlin-based cyber insurance company, to raise $3.5 million euros ($4 million) in pre-seed financing.
Cybercriminals are operating on a wide scale across business types, employing sophisticated tactics to compromise security and commit fraud, according to a PYMNTS and nsKnox collaboration.
Learn more: FinTech Risk Management Playbook: Combating B2B Payments Fraud
Researchers found that 64% of IT leaders surveyed said their company experienced a breach related to enterprise resource planning in the last two years.
Baobab’s financing round was led by Project A Ventures with involvement from La Famiglia, Discovery Ventures and angel investors including Clark, Comtravo, Gabi, Hellas Direct, Bit Capital & Ioniq and Lendable, EU-Startups reported.
The new cash will be used to add employees including insurance professionals and cybersecurity and technical experts.
Founded last year by Vincenz Klemm, the former co-founder of InsurTech Gabi, and Anton Foth, who had worked at BCG Digital Ventures, Baobab insures small- to medium-sized businesses (SMBs) against business interruptions, liabilities and service costs related to cyberattacks.
Under Baobab’s model, insurance will be distributed by collaborating with brokers, who can then sell the insurance products to their clients.
The company will be launching in Germany in early 2022, followed by other European markets.
Klemm said that losses from cybercrimes are projected to hit $6 trillion globally in 2021 when all the accounting is complete. That’s double compared to five years ago, he added.
Baobab not only issues insurance to SMBs but also provides protection and monitoring against attacks.
The FinTech Risk Management Playbook examined remote work risks where telecommuting environments often use less-secure equipment and traditional username/password-based authentication; how fraudsters use new tactics to commit B2B payments fraud across all types of businesses; and the fact that cybercriminals are focusing less on retail fraud and more on large-scale, complex commercial fraud.