Today's startups are "very poor" on brand building, unable to build lasting connections with customers, says Acko’s Varun Dua

The success of any business relies on how well it connects with its customers over time. While many startups rush to capture attention through flashy ad campaigns and marketing, Varun Dua, Founder of ACKO Insurance, believes that startups today have lost their way by becoming too promotional in their approach. 

In an open dialogue with Shradha Sharma, Founder and CEO of YourStory, Dua talks about Acko’s journey and its impact on India's insurance landscape at the India Innovation Summit, hosted by Arkam Ventures.

“The current startup ecosystem is very poor on brand building. Customers don't form lasting connections with overly tactical and promotional approaches. We have consistently looked at long-term horizons. Brands need to evolve over a period of time. Most of us as new-age companies start very slapstick trying to get the consumer's attention and put humour in our ads,” he says. 

Brand building, according to Dua, is an art that seems to be fading, with startups often prioritising capital expenditure over genuine brand development.

“There's no Vodafone or Fevicol today—they have been stuck for years. I don't think we, as an ecosystem, have done justice to it in a meaningful way. Many new-age startups resort to short-term promotional tactics, such as advertising during IPL. That's essentially what it roughly comes down to,” he adds. 

The serial entrepreneur believes the solution, in fact, lies in sacrificing some short-term growth to build the brand, mainly because it's not going to give businesses the same immediate return on investment (ROI). 

“This doesn't require massive budgets or television advertising. It can be achieved through various means, even with a modest budget of Rs 5 or 10 crore. The focus is on targeting a specific audience, rather than investing in broad-based television campaigns just because you have capital,” notes Dua. 

Acko's ‘Eureka’ moment 

Like many other entrepreneurs, Dua found himself at a crossroads before launching into his startup journey. It started in 2001 when he got a job at Tata AIG Life Insurance right after the Indian insurance sector opened up to private companies.

“That was like a stop-gap situation but it turned out to be a very good stint. I learnt a lot. I think nobody knew what was happening in insurance at that time,” Dua notes. 

During 2007-2009, while the internet economy began booming, Dua was keen on being a part of it. He decided to take a short break to figure out his next steps. 

“I had no ambition of becoming a founder, an entrepreneur or setting up a business. My two jobs that I tried to get were [at] Cleartrip and eBay because those were the only two internet companies in Mumbai at that time. But both did not work out,” he recalls. 

However, Dua noticed a major issue: insurance companies were struggling with technology.

“I had seen that in my early journey. So, I started selling software to insurance companies along with a co-founder I met at that time who was from IIT-Bombay. But that didn't scale at the pace I imagined it would,” he says. 

Next, he launched Coverfox Insurance, a company aimed at selling insurance directly to consumers, similar to PolicyBazaar. However, it was during this venture that he realised the solution wasn’t just in distributing insurance products.

“During that phase, it dawned upon me that really the only way to solve this space is to manufacture and own the product, and not be the thin layer distribution,” adds Dua. 

And Acko was born. Founded in 2016, the company has so far raised $450 million in funding from investors such as General Atlantic, Multiples Private Equity, Accel, Elevation Capital, Lightspeed Multiples, Amazon, and Canada’s CPPIB. It has grown by 88% annually for four years, serving over 75 million customers with nearly 900 million policies issued.

Tapping the insurance opportunity

While many buzzwords such as ‘fintech’ or ‘insurtech’ tend to sweep through the space, for Dua, they don’t mean much. 

“Everywhere there's a different consumer motivation and leads to very different business models. There's no loyalty in credit. If I need a cheap loan, I need a cheap loan. That's about it. If I look at it from a consumer standpoint, the consumer doesn't care where he gets his credit from, as long as it's cheap and it's quick,” Dua highlights. 

Acko currently offers insurance for various needs including travel, gadgets, and health, catering to over 80 to 100 million customers, said the founder. 

Talking about brands like Coverfox Insuranceor PolicyBazaar, there are around 20 insurance suppliers in the marketplace. However, Dua believes roughly half of these brands are found to lack recognition and reliability among customers. This results in only 8-10 reputable suppliers being left, with major players like Tatas and ICICIs often holding market power.

“The marketplace does not have the power, the supplier does. That’s why I made the choice to go and manufacture the product. Therefore, when it is looked at sector by sector, it is observed that most of the market cap globally is also created by the manufacturer,” he signs off.