Venture capital firm E4E Africa has increased its shareholding in the South African insurtech startup Pineapple through a substantial secondary transaction. The deal allows an early investor to exit with a return while enabling E4E Africa, already a backer since 2021, to build a significant minority stake in the company.

The specific financial details of the transaction, including the size of the stake and the valuation, were not disclosed.

Secondary sales, where existing shares are sold by one investor to another, are becoming an increasingly important feature of Africa’s venture landscape. They provide a crucial mechanism for early-stage investors, such as angels and seed funds, to realise returns without waiting for a full company acquisition or an IPO, which remain infrequent on the continent.

For a later-stage investor like E4E Africa, the transaction allows it to double down on a portfolio company it believes is outperforming.

“Secondary transactions create liquidity for early-stage investors, which is a critical part of building a successful ecosystem in Africa,” E4E Africa stated, adding that the deals “give us the opportunity to build up substantial stakes in businesses.”

Pineapple’s Growth Trajectory

Founded in 2017 by Marnus van Heerden, Ndabenhle Junior Ngulube, Matthew Elan Smith, and Sizwe Ndlovu, Pineapple has established itself as a prominent player in South Africa’s fintech scene. The company operates on a peer-to-peer-inspired model for insurance, aiming to reduce costs, eliminate administrative friction, and increase trust.

Customers can get a quote and insure items simply by taking a picture with their smartphone. Premiums are pooled, and any unused funds at the end of the year are returned to the customer community, a feature that has resonated in a market with low insurance penetration.

The startup’s growth has been fueled by significant venture funding. In November 2023, Pineapple secured a $22M Series B round led by new investors Futuregrowth, Talent10, and Mineworkers Investment Company (MIC), with participation from existing investors including Old Mutual ESD and Lireas Holdings. This brought its total funding to over $29M , making it one of the best-funded insurtechs in Africa.

According to the company, its digital-first approach appeals to a new generation of consumers, with nearly half of its thousands of customers being first-time insurance buyers.

The Market Context

Despite being one of the world’s fastest-growing regions for insurance, Africa has a penetration rate of just under 3%. Traditional insurance models are often perceived as opaque and untrustworthy, creating a significant opportunity for tech-driven disruptors like Pineapple.

By leveraging AI and a mobile-first platform, the company is tapping into a large, underserved market. Its ability to attract first-time buyers is a key indicator of its potential to expand the overall market rather than just compete for existing customers.

Amrish Narrandes, Head of Private Equity/Venture Capital at Futuregrowth Asset Management, noted during the Series B round that Pineapple’s “innovative approach to insurance aligns seamlessly with our investment philosophy.”

E4E Africa, based in Cape Town, continues to be an active investor in the region. Its portfolio includes AI data-labeling platform Enlabeler and, more recently, it led a $1M seed round for Conservio, a sustainable travel platform. This latest move with Pineapple solidifies its strategy of taking concentrated positions in companies the firm believes have a clear path to a meaningful exit.

Pineapple at a Glance

Key Funding Rounds

• Seed Round (2017): 5.2m ZAR led by Lireas Holdings to launch the initial product.
• Series A (2021): $5.4m (80m ZAR) to scale operations.
• Series B (2023): $22M led by Futuregrowth, Talent10, and MIC to accelerate expansion across South Africa.

What’s Next for Pineapple?

Armed with its Series B capital and a fortified relationship with a key investor in E4E Africa, Pineapple is positioned for further expansion. The immediate focus will likely be on deepening its market share in South Africa and enhancing its AI-powered platform to improve user experience and underwriting efficiency.

• Growth: The primary challenge is to continue its rapid customer acquisition pace, particularly among the uninsured and underinsured population, while managing risk and maintaining a healthy claims ratio.
• Competition: The company faces competition from both agile insurtech startups and incumbent giants like Old Mutual (which is also a partner and investor) that are digitising their own offerings.
• Expansion: While the immediate market is South Africa, the model is potentially replicable in other African markets with similar dynamics of low insurance penetration and high mobile adoption, though this would present new regulatory and operational hurdles.