Boston’s Jay Greenberg has a bright idea to help cash-strapped businesses take their lawsuits to court: Crowdfund them.
That’s the idea behind LexShares, an online marketplace Greenberg and his business partner Max Volsky unveiled on Wednesday. The website lets investors buy a stake in the outcome of a lawsuit by giving businesses the cash they need to operate while their cases go forward.
“There’s really an education gap,” said Greenberg, a 2008 Boston College grad who spent several years with Deutsche Bank. “Investors don’t know this is an asset class they can invest in, attorneys aren’t sure how it works, and plaintiffs don’t realize it’s available.”
LexShares isn’t quite Kickstarter for lawsuits, however. Rather than pitching its services to any average Joe seeking public donations to sustain his legal crusade, the New York-based startup is trying to draw businesses who need $100,000 to $1 million to take their suits forward. The legal startup’s staff of six vets suits before posting them, and only government-accredited investors can buy “stock” in a suit.
Atlas Venure, a Cambridge-based investment firm, led LexShare’s seed funding round over the summer with an undisclosed amount of funding. Chris Lynch, a partner at Atlas, said he saw LexShare’s crowdfunding platform as a way for small companies and startups to gain leverage against — and win larger settlements from — big corporations that have ripped off their ideas, something Lynch said he has seen happen.
LexShare’s first offering, which it only described as a product liability case against a Fortune 500 company seeking $250,000, was “wildly oversubscribed,” he said, and the company estimates the United States litigation market is worth $200 billion.
Jack NewshamJack Newsham can be reached at firstname.lastname@example.org. Follow him on Twitter @TheNewsHam.