Tech-based litigation financier LegalPay on Monday announced it has secured an undisclosed seed funding round led by accelerator VC, 9Unicorns to tap an estimated $20 billion legal expense market in the country.
Early-stage investment platform LetsVenture also participated in the round along with some marquee angel investors including Ambarish Gupta, Founder of New York-based PE-fund Basis Vectors, and Founder of Knowlarity.
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.”
Kundan Shahi, CEO, LegalPay
“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,” Kundan added.
He further stated that with the second wave of COVID-19 adversely impacting businesses, litigation cases are on the rise. The company plans to deploy over Rs 100 crore for the next two years on late-stage cases that have a faster realisation.
Founded in 2020 by seasoned investor Kundan Shahi, LegalPay is a third-party litigation finance platform that helps entities/businesses ease the financial burden of litigation cases such as shareholder and IPR related disputes. Such cases are filtered with the help of technology from the websites of Indian courts. It focuses mostly 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 strong legal merit, a high-performing legal team, and clarity on the settlement timeline.
The cases are financed 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 undergo 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 enables investment by the family offices and HNIs with a bigger risk appetite, it aims to allow 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 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.”
At a portfolio level, LegalPay aims to settle claim value worth Rs 200 crore (AUM) in this year itself.