Just over a year after the platform’s launch, Cormac Leech, chief executive of AxiaFunder shares its plans to scale up…
WHEN AXIAFUNDER launched in 2018, it pledged to bring innovation to the world of litigation funding. Just over one year later, it is still evolving.
The litigation financing platform has just closed its largest funding campaign to date, successfully raising £550,000 for a commercial fraud case. It took just six weeks and 47 investors to reach this key milestone.
“As we do larger cases, we start to become more relevant to institutional funders as they can now deploy more capital into each case,” says Cormac Leech, chief executive of AxiaFunder. As well as increasing the value of its cases, AxiaFunder has also seen a rise in the frequency of its cases over the past couple of months.
The platform funded two cases in January – which Leech described as “minimum viable product cases”. In September, the platform stepped up its goals with a £40,000 case; followed by the £550,000 commercial fraud case, and £70,000 for a professional negligence case, which is just about to close.
Behind the scenes, AxiaFunder reviews around 20 cases for every one that is presented to investors. “Next year we expect to launch at least one case per month on the platform,” says Leech. “Being able to fund cases requiring over £500,000 is a significant proof point for us. It increases our relevance, since it is difficult to conduct meaningful commercial litigation in the UK for less than a few hundred thousand pounds, unless the legal team is working on a full contingency basis.”
At the time of writing, AxiaFunder had approximately £3m worth of funding requirements in its pipeline, covering seven “pre-vetted” cases, and once they go live on the platform they will be available to both retail and institutional investors. While there has been a recent trend for alternative lenders to shift towards institutional funding and away from the retail model, AxiaFunder will always seek to be accessible to both types of investor.
“We expect there will be cases that will be more attractive to retail investors than institutional investors and in any event, having diversified sources of funding makes AxiaFunder more resilient,” Leech explains. Of the 47 people who funded the £550,000 case, around two thirds were previous investors. There has also been “very high demand” for the platform’s Innovative Finance ISA (IFISA), which appeals to savvy investors who want to shield their returns from taxation. And AxiaFunder’s returns are not insubstantial.
The platform’s first case returned an impressive 43 per cent to investors, and its other cases are targeting up to 70 per cent per annum with the possibility of investing tax-free via an IFISA. While the returns reflect the higher level of risk involved, as the platform scales up it expects to be able to offer more diversification options for investors, while also hiring more legal professionals to help with the rigorous due diligence on potential new cases.
Of course, capital is at risk and returns are not guaranteed – investors should bear in mind that there is a possibility they can lose all of the capital invested and, in remote cases, could lose more than their original investment. To fund these plans, AxiaFunder will soon launch a Seedrs fundraising campaign to raise working capital which will be used to build the team.
In another sign of the platform’s innovative outlook, it will also work to develop a portal through which it can leverage input from a group of accredited case assessors on a remote basis. “Our vision is to be able to tap into a large number of carefully vetted and incentivised litigation experts, distributed around the country and internationally,” says Leech. “This will enable us to profitably scale the business.” With plans like this, the outlook for AxiaFunder looks positive.