Many InsurTech startups pursue venture capital or equity financing to fuel their growth (the sale of stock to investors who gain ownership interest in return). Germany’s Friendsurance recently took a different route to raise cash: debt financing.

The Berlin-based peer-to-peer insurance broker recently secured nearly $1.7 million in new financing via creditshelf, a company based in Frankfurt, Germany that provides “bank-independent financing,” advising and related services for small and medium-sized businesses, as noted on its website. Friendsurance Co-Founder and Managing Director Tim Kunde announced the news on his company’s LinkedIn page, where he argues that debt financing to fuel continued expansion is the right choice at this point in time.

Plans call for using the new financing to fuel growth in Germany and international expansion through partnerships and other measures.

“It comes with less strings attached than most other financing forms, including venture debt.,” Kunde said. “Venture debt, a distant cousin of the classical loan, wants to deliver the best of two worlds, of equity and of debt financing. But it’s not straightforward to strike the right balance for all parties involved, and therefore the process is often much more complex than a bread-and-butter loan.”

Kunde said that debt financing proves the “bankability” of Friendsurance and its business model, which focuses on making insurance easy and affordable to buy online. Launched in 2020, Friendsurance operates as an independent broker and managing general agent primarily German market with a number of domestic insurance partners or companies that do business there. The company said it works with more than 175 insurance companies that serve nearly 150,000 customers.

Even with the new financing choice, it’s not as if venture financing hasn’t been helpful, Kunde writes.

“We’re already financed by various institutional and private investors from the tech community. All our investors have an outstanding international profile and diverse strength from which we benefit,” Kunde’s posting asserts. “We tremendously value their support on the financing, as well as on the strategic side.”

Kunde’s comments on financing come during a challenging year for InsurTechs and most other businesses, thanks to the coronavirus pandemic and COVID-19. In the 2020 first quarter, new InsurTech venture capital financings dropped by half as investors pulled back during the global quarantine.

Investments have continued, generally on the smaller side, even as quarantine restrictions have been relaxed. Still, there’s been at least one large venture capital financing so far this year. Workers compensation provider Pie Insurance raised $127 million in new financing and capital commitments in late May.

Click here for the full Friendsurance blog posting.