New Delhi, April 18: Florida-based Hedge fund Naples Global has tied up with LegalPay, India’s first and only litigation and interim finance provider, to launch a $5 million fund for Indian founders to protect their rights of any kind of board-related disputes. This is the first of its kind of fund to have launched in the interest of Indian founders.
The fund has primarily committed $5 million (about Rs 37 crore) to deploy with an option to increase the exposure for funders who are looking out for fighting their litigations and arbitration.
Founder-Investor disputes in India are on the rise lately for various reasons. The ecosystem has witnessed at least two high-profile cases in the last two months and many others that do not come into the limelight. Due to certain circumstances, there are disputes between the stakeholders of the company which have resulted in founders being forced to step down from their own company. Many founders in the present case scenario don’t have the financial backing to protect their interests if there is litigation or arbitration with their investors or other stakeholders.
LegalPay is of a strong belief that all founders have the right to be heard in a strong, safe, and legal manner that would enable them to put their case in a much more beneficial and will help them to be heard.
“Founders put their blood and sweat to build start-ups but often find investors arm twisting them on several fronts. Since most founders are first-generation entrepreneurs, they lack the financial muscle to assert their legal rights,” said Kundan Shahi, chief executive, LegalPay.
He further added that the idea behind this product is to create a level playing field for those disgruntled founders so that they don’t give up on their legitimate because of financial constrain. With such an investment and the backing of Naples Global, LegalPay believes that all founders who have been wronged by their pool of investors would be able to protect their rights and interest in their own company.
To this Kelly Morris, a partner at Naples Global LLC stated,” Our growing investor community continues to remind us that the demand for alternative investments is as increasing and now we need outside the USA, and LegalPay and their leadership team fit that category perfectly as they are creating a lucrative asset class in India/Asia,“
As a leading US hedge fund, it looks forward to expanding its asset allocation as the fund grows its US business and service into new international markets, Morris said adding, “Our investment philosophy is rooted in supporting exceptional teams to grow valuable businesses.”
LegalPay provides non-recourse funding in commercial legal claims in exchange for a share in the final recovery, implying that the litigant only has to pay only upon a successful realization of the claim.LegalPay is a VC-backed start-up with support from prominent names such asHedonova, 9Unicorns, LetsVenture, VentureCatalysts, and Amity Innovation Incubator.
LegalPay has also emerged as a significant player in providing interim finance to companies that have entered into insolvency under the Insolvency and Bankruptcy Code, 2016. This finance is provided at market competitive interest rates with structures suiting the requirements of the company.
