This is how Germany's first truly sustainable insurance company is to be created

Start-up Verde is taking an extreme approach to being as sustainable as possible. That doesn't make growth easy.

Most startups these days don't need much except sweat, love and many lines of program code. Sometimes even just six lines are enough, as with fintech Stripe, which used it to get a multi-billion valuation to make the very big leap in a short time.

The makers of Verde from Munich have a much more difficult time.The big goal of the start-up, which was founded in 2017 and now consists of six permanent employees, is to become Germany's first sustainable insurance company. "Sustainable banking and sustainable investing is becoming more and more normal, it's just that insurance companies don't have it yet," says Elena Sulzbeck, who is both the assistant to the boss and press officer on the team.

But this requires more than just program lines. The supervisory authority Bafin requires Verde to hold 3.5 million euros in reserve for a license, which is a large sum in itself. Verde, however, insists on not bringing a large investor on board, and instead wants to set up the insurance company as a cooperative and grow sustainably. They have already raised 1.1 million euros, but still need 2.4 million euros - and that's just to get started. The fact that the initial phase of such a start-up can take four years or more is quickly explained.

In 2017, Marie-Luise Meinhold started Verde as the founder, although a distinction must be made. Because there is both a Verde eG, i.e. a cooperative, and a Verde AG, i.e. a stock corporation. This strange construct can be explained by the fact that Verde would like to have as many shareholders as possible, which works well via a cooperative. However, cooperatives are not allowed to operate insurance in Germany, which led to the creation of Verde AG, whose main owner is now Verde eG again. "It's all a bit complicated, but there's no other way if we want cooperative insurance," says Sulzbeck.

After the start-up phase, Verde entered a period of discovery. Role models were lacking, as there was no truly sustainable insurance in Germany yet, so they felt their way forward bit by bit. In the meantime, they offer theft protection for bicycles, partly to pay off the costs until the necessary licenses are issued.

How seriously they take sustainability is already apparent in small ways. The cooperative's account is at the green GLS Bank, the office gets by without paper for the most part, and the team travels to events either by bicycle or train. According to Hilfswerft, Verde eG is one of the 222 most sustainable companies in Germany. The cooperative also has its balance sheet drawn up for the common good, which allows companies to test how public-spirited they are. Verde performs well in this test.

In order to finally offer liability and household insurance, Verde needs 3.5 million euros in cash. Verde does not want to bring traditional investors on board for this, as they could otherwise exert too much influence on the development of the still young company - and possibly steer it in a less than sustainable direction. Instead, they want to inspire more cooperative members on the one hand, who can buy in from 300 euros. On the other hand, they have been focusing for some time on profit participation rights, which interested parties are to acquire. They want to pay 2.5 percent in interest per year, depending on profits - and then, of course, there remains the question of whether they can even get the financing together to ever be allowed to offer as a Bafin-licensed insurance company.

"If an insurance policy works and is sustainable at the same time, we believe that's a market advantage"

Elena Sulzbeck, Verde

The Munich-based start-up now has 130 cooperative members, plus 1070 tons of CO2 saved and 1.1 million euros already invested in sustainable projects. These include, for example, schools or streetcar lines and sustainable bonds from companies or countries.

As soon as the license is in place, they at Verde want to focus on liability and household insurance and roll up the billion-dollar market at least a little bit. 50 million households in Germany have household insurance, and Verde sees huge market potential in that. "If an insurance policy works and is sustainable at the same time, we believe that's a market advantage," Sulzbeck says confidently.

The team wants to invest the money that customers are then expected to deposit with Verde for their insurance policies in sustainable investments that have a positive social and environmental impact, Sulzbeck explains. To this end, they want to exclude individual industries from the outset, such as armaments and weapons, nuclear and coal-fired energy, biocides, pesticides, factory farming, genetic engineering or even addictive substances.

Verde also says it does not invest in countries where torture is practiced or the death penalty is imposed. In addition, they look at the remaining investments and evaluate how sustainable they are. For this purpose, they consult external reports or public reports, among other things. They are not rigidly committed to green energy, for example. If, for example, there is a lack of housing in cities, this is also a possible investment object because it has a social benefit.