According to data firm CB Insights, over 800 privately-held tech firms worldwide have hit the $1 billion valuations.

However, Marshmallow, a London-based digital insurance platform is a different case. The company was founded in 2017 by mixed-race identical twins Alexander and Oliver Kent-Braham and it’s the second Black-owned company in Britain to reach the status of “unicorn.” First, Zepz had achieved a $5 billion valuation in an august financing round. The firm was founded by the Somali-born entrepreneur Ismail Ahmed.

 “We were pretty surprised by this fact,” Oliver Kent-Braham, Marshmallow’s CEO, told CNBC in an interview.

The tech industry in the United Kingdom lacks diversity. Less than 1.6% of venture capital funding was shared between the all-ethnic founding teams from 2009 to 2019, according to Extend Ventures, while only 0.2% of funding went to Black entrepreneurs.

Kent-Braham blames it on the venture capital mindset. He argued that tech investors ignore cold emails and only back founders that their colleagues recommend. 

 “VCs really need to look a bit broader,” the 29-year-old entrepreneur told CNBC.

“The number of times a VC said: ‘I wouldn’t respond to cold emails because you should be able to hustle and intro to me.’ It’s much easier to hustle and intro to you if you went to your university and you know a ton of people that know you.”

Meanwhile, Kent-Braham’s firm, Marshmallow, raised $85 million in a funding round raising the firm’s value to $1.25 billion. The cash comes from existing investors such as Passion Capital, an early investor in digital bank Monzo, as well as South African bank Investec and French reinsurer Scor.

Additionally, the Kent-Braham brothers will still control most of the business. The pair co-founded Marshmallow with software engineer David Goaté, who they previously worked with at London start-up Yoti.

 A digital-only insurance provider

Marshmallow is a digital-only insurance provider. The British firm started offering insurance mainly to expats who face higher charges from traditional insurers. The company is authorized by the U.K.’s Financial Conduct Authority. It uses machine learning to adjust policies for customers as a key advantage over incumbents in the industry like Admiral and Axa.

“We try to use more data than our competitors to underwrite people and then to digitize everything,” Kent-Braham said. “We need to hire about half what our competitors need to hire to support customers. We believe we’re really well-placed to take market share.”