General insurance startup Digit is raising $200 million from new investors Sequoia Capital India and IIFL Alternate Asset Managers as well as existing investor Faering Capital and others in a round that expects to double its valuation to $3.5 billion in less than six months.

The funding comes when risk investors are aggressively seeking a piece of India’s expanding online insurance industry, which is gaining from the transition to a digitised economy. Digit’s rival Acko is also in the advanced stages of closing a $200 million round valuing the startup at over $1 billion. Digit’s funding round will move the startup into the ranks of the most valued insurtech ventures in South Asia. The deal still needs to be approved by the Insurance Regulatory and Development Authority of India (IRDAI).

Kamesh Goyal, the Chief Executive Officer of Digit, said that the capital would be used to increase the solvency requirement of 150 per cent insurer’s liability instructed by the regulators. It will also help maintain its growth trajectory and settle claims in a potential third wave of Covid-19 in the country.

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“Since October 2020, we’ve seen good growth, which continued in the March quarter as well, both in premiums and customers. In April, we saw an 80% growth in premium compared to the previous year; looking at the numbers, we thought we might need some additional capital for solvency,” Goyal said.