Tech-based litigation financier LegalPay has raised an undisclosed seed funding round led by accelerator VC, 9Unicorns to tap an estimated $20 billion legal expense market in the country.
The round also saw participation from LetsVenture along with some marquee angel investors including Ambarish Gupta, Founder of New York-based PE-fund Basis Vectors, and Founder of Knowlarity.
Speaking about the funding, Kundan Shahi, CEO, LegalPay said, “Litigation finance promotes lawsuits to be decided purely on their merits. Simultaneously, it is also creating an alternative investment asset class for Indian investors with an opportunity to realize significant returns through litigation finance. We are delighted that our current investors have placed their trust in the vision of our company.”
“This fundraise is a validation of growing interest in this asset class. We believe that with the constant support of our investors, we will be able to change the role of third-party legal financing in India in the years to come,” he added.
He further said that with the second wave of COVID-19 severely affecting businesses, litigation cases are increasing. The company intends to extend over Rs 100 crore for the next two years on late-stage cases that have a quicker realization.
Established in 2020 by seasoned investor Kundan Shahi, LegalPay is a third-party litigation finance platform that enables entities/businesses to reduce the financial burden of litigation cases such as shareholder and IPR related disputes. Such cases are separated with the help of technology from the websites of Indian courts.
It focuses essentially on late-stage cases or those that are nearing closure with a financial requirement of anything ranging from Rs 20 lakh to Rs 3.5 crore. Besides, cases should have solid legal merit, a high-performing legal team, and clarity on the settlement timeline.
The cases are funded through funds raised from large family offices and HNIs/ultra HNIs in the country. The investors in return can expect a minimum of 30 percent IRRs across stages and types of cases, which also means that the cases go through a strict and detailed risk and underwriting process.
LegalPay charges a two percent management fee and a 20 percent carry for the transactions made on the platform. While the platform facilitates investment by the family offices and HNIs with a bigger risk appetite, it strives to give access to individual investors by the end of 2021.
Anuj Golecha, Co-founder at 9unicorns, said, “While litigation finance has been in practice since 1870, LegalPay is trying to organize the litigation financing sector by giving access to curated deals to the existing litigation financiers. It has been structured in such a fashion that even at a 17 percent success rate, investors can secure their invested amount. This can be a lucrative alternative-investment asset class, for the Indian investors, returns of which are not correlated to market performance.”
LegalPay is a very innovative platform offering litigation finance solutions and bringing together lawyers and investors. The company seems to be performing very well and I believe will only move upwards from here. My best wishes to the team of LegalPay.Shishir Gupta, Founder and CEO, StartupLanes
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