Two of the leading investors in Wefox, the troubled insurance technology company, are proposing to lead a €25m (£21.1m) capital injection to thwart a rival proposal from insurer Ardonagh to buy large chunks of the company.

Sky News has learnt that London-listed Chrysalis Investments and Target Global submitted a term sheet to Wefox in recent days that they argue would preserve value for its broader shareholder base.

The €25m investment, which would also include funding from a number of other Wefox shareholders, would act as a bridge until the group is able to sell Assona, a subsidiary which provides insurance for electric bikes, according to insiders.

The proposal comes amid a bitter fight for the future of what was once one of Europe’s hottest insurtech start-ups.

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Wefox has been ravaged by losses in a number of its key markets including Italy, although its operations in the Netherlands remain profitable.

The proposal led by Chrysalis and Target is designed to steer the company towards overall profitability, which they are understood to believe is possible next year.

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Mubadala, the Abu Dhabi state fund, favours selling a major part of Wefox to Ardonagh in a €550m deal that would preserve its returns but wipe out other shareholders and the company’s founders.

Sky News revealed last month that Mark Hartigan, the controversial British boss of Wefox, had warned investors that it could face collapse within months amid a slew of regulatory and financial challenges.

Wefox was valued at $4.5bn (£3.6bn) in a funding round less than two years ago and counts Barclays and JP Morgan among its lenders.

Its evaluation of funding options has made it the latest giant of Europe’s tech scene to face an existential crisis.

Founded in 2015, Wefox sells insurance products through in-house and external insurance brokers, and has frequently boasted of its ambition of revolutionising the insurance industry through the use of technology.

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It has more than 2m customers across its business.

Mr Hartigan took on his new executive role from Julian Teicke, one of the company’s co-founders, who said in a public announcement in March that his transition to become president would allow him to “dedicate more time and energy to my big passion: supporting founders in building up their own ventures”.

The new boss is also cutting jobs in central functions, having shed 60 roles in recent weeks, with more expected to follow.

In July 2022, Wefox raised a $400m Series D funding round valuing it at $4.5bn, making it one of the largest fintechs in Europe.

That followed a $650m round in May 2021 valuing it at $3bn, reflecting the frothy appetite of investors to back scale-ups regarded as having the potential to become global competitors of genuine scale.

It then secured a further $55m in equity financing and the same amount in debt funding from Barclays and JP Morgan a year ago.

Chrysalis declined to comment.

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