Florida based Hedge fund Naples Global has tied up with LegalPay, India's litigation and interim finance provider, to launch a $5 million fund for Indian founders to protect their rights during any kind of board related disputes. This is first of its kind of fund to have launched in the interest of Indian founders, it said ina press statement.
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 atleast two high profile cases in the last two months and many others that do not come to 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 financial backing to protect their interest if there is a litigation or an arbitration with their investors or other stakeholders, the statement said.
“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.
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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.
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."
