On Monday, the tech-based litigation financier LegalPay announced it has secured an undisclosed seed funding round which was led by accelerator VC, and 9 Unicorns to nab an estimated $20 billion legal expense market in the nation.
The early stage investment platform LetsVenture was also the participant along with marquee angel investors. It involves Ambarish Gupta- Founder of New York-based PE-fund Basis Vectors, and Founder of Knowlarity.
The startup was founded in 2020 by Kundan Shahi. It is a third party litigation finance platform, helps businesses ease the financial burden of litigation cases such as shareholder and IPR related disputes and issues. These are filtered with the help of technology from the sites of Indian courts. Mainly it focuses on late-stage cases, or those that are nearing closure with a financial need of anything ranging from INR 20 lakh to INR 3.5 crore. Other than this, the cases should have strong legal merit, high-performing legal team, and clarity on the settlement time period.
In addition, the cases are financed via funds raised from large family offices and HNIs/ultra HNIs in the nation. Investors can expect a return of minimum of 30 percent IRRs across stages and types of cases. This also shows that the case undergoes a strict and detailed risk and underwriting process.
For this LegalPay charges a 2% management fee and a 20% carry for the transaction made. The moment it enables the investment by the family offices and HNIs with more risk, it aims to allow access to individual investors by the end of this year.
Meanwhile, Co-founder at 9unicorns Anuj Golecha said- “While litigation finance has been in practice since 1870, LegalPay is trying to organise 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.”
On the other hand, Kundan Shahi CEO at 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.”