LexShares Explained and How to Invest

LexShares is a platform that allows you to invest in litigation finance, which means you can earn returns by funding lawsuits.

LexShares was founded in 2013 and is headquartered in New York City. It's a registered funding portal with the Securities and Exchange Commission (SEC).

LexShares allows you to invest as little as $1,000, making it more accessible than traditional investment options.

Investors can earn returns in the form of interest or principal repayment, depending on the terms of the investment.

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LexShares is a private litigation finance firm founded in 2014 by Jay Greenberg and Max Volsky.

The company was founded by Jay Greenberg, a former technology investment banker, and Max Volsky, a former litigator.

LexShares has offices in Boston, Massachusetts, and New York City.

LexShares allows accredited investors to invest in commercial legal claims.

Investing in LexShares can be a great way to diversify your portfolio, as investments made through the platform have a very low correlation with the stock market.

LexShares deals in litigation finance, which means you'll be waiting for the conclusion of a case to see a return. There is no standard time limit for litigation, so be prepared for a potentially long wait.

Historical returns from successfully litigated cases are much higher than the standard 10% benchmark, making LexShares a lucrative complement to a traditional stocks/bonds mix.

However, keep in mind that there is zero secondary market for this type of investment, leaving you with essentially no liquidity.

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One of the main benefits of investing in LexShares is that it offers a unique opportunity to diversify your investment portfolio.

However, it's essential to be aware of the potential downsides. For instance, offerings can sell out quickly, so you'll need to act fast if you're interested.

Additionally, LexShares investments are considered illiquid, meaning there's no secondary market for them. This can make it difficult to cash out if you need to access your money quickly.

It's also worth noting that LexShares is limited to accredited investors only, so you'll need to meet certain requirements to be eligible.

Investing with LexShares offers several benefits that make it an attractive option for accredited investors.

The minimum investment is relatively low at $2,500, which is a pretty low starting price compared to other platforms catering to accredited investors.

Litigation financing is an excellent way to diversify your portfolio, as it has very little correlation to the stock market.

The average investment time period is 15 months, which is relatively quick compared to other asset classes like real estate or startups that can take 5-10 years to see a return.

With a reported win rate of 70% and a median IRR of 47%, LexShares offers the potential for high returns on investment.

Here are the key benefits of investing with LexShares at a glance:

LexShares has some potential downsides to consider.

One of the main cons is that potential offerings can sell out quickly, leaving you with limited options.

Investing in LexShares can be an illiquid investment, meaning there's no secondary market for this type of investment.

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Only accredited investors are allowed to participate in LexShares, which can be a barrier for some people.

The minimum investment for fund investments is significantly higher compared to other options.

Here are some of the key cons to consider:

One area where LexShares could improve is in providing a steady supply of viable litigation, as new cases are posted irregularly and sell out quickly.

Even accredited investors with the required $2,500 may struggle to make an investment due to the rapid selling out of cases.

There's no open market for resale of investments, making it a one-way ticket with no exit strategy.

Investors will have to wait for the lawsuit to be resolved, which can be a long time, especially for the Marketplace Fund.

The $250,000 minimum investment for the Marketplace Fund is a significant barrier for many investors, even accredited ones.

This high minimum investment may limit the accessibility of the fund to a large number of potential investors.

LexShares was founded in 2014 and is a commercial litigation funding firm based in Boston. It has a strong track record of investing in business litigation cases, with over $2.63 billion of financing provided for lawsuits.

LexShares has two funds: the LexShares Marketplace Fund I and the LexShares Marketplace Fund II. The first fund was fully subscribed for $25 million in January 2018, while the second fund has a target of $100 million and has already raised $30 million.

The company uses a "diamond mine" piece of software to curate about 75 percent of its deal flow, which aggregates federal cases and looks for relevant keywords. This software has been instrumental in streamlining the company's investment process.

Here's a brief overview of LexShares' funding rounds:

LexShares has invested in 103 case offerings, providing nonrecourse capital to companies that are involved in lawsuits. If the company loses the lawsuit, they owe nothing, but if they win, LexShares gets a potential future recovery from the lawsuit.

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LexShares's funding history is an interesting topic. In 2014, LexShares secured a Seed VC funding round on November 19th.

The funding round was led by Atlas Venture and included undisclosed angel investors. The exact amount of funding was not disclosed.

LexShares' valuation at the time of the funding round was $XXM. I've seen companies with high valuations like this before, but without more information, it's hard to say what this means for the company's future.

The company's revenue at the time of the funding round was $0 in FY undefined. This could be a sign that the company was still in its early stages and hadn't yet started generating revenue.

LexShares is doubling down on its second fund, which has already raised $30 million toward a target of $100 million.

The company invests in business litigation, looking at the merits of the case before considering investment, similar to how venture capitalists look at startups.

LexShares had invested in 103 case offerings, collectively underwriting more than $2.63 billion of financing for lawsuits, including $855 million in 2019.

The company uses a "diamond mine" piece of software that curates about 75 percent of the company's deal flow by aggregating federal cases and looking for relevant keywords.

LexShares was reliant on inbound deal flow early on but has since developed this software to streamline their process.

The company provides nonrecourse capital that could be used by the company to continue its business operations during the lawsuit, with no repayment obligation if the company loses.

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LexShares offers a median net annualized return of 47% as of December 31, 2020, making it a potentially lucrative investment opportunity.

This return is based on the platform's 70% win rate for resolved investments, which is a significant advantage for investors.

Investors can earn returns through individual case investments, where they receive a portion of the monetary recovery if the case resolves positively.

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LexShares earns a carried interest, or share of profits, from resolved investments, which is then disbursed to investors.

Alternatively, investors can participate in the LexShares Marketplace Fund II, which takes a management fee and carried interest from resolved investments.

In this fund, investors have a fixed investment period of 36 months, after which the returns are redistributed among all litigation funders.

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Litigation finance investments are typically non-recourse, meaning investors may bear a total loss on their investment if the legal claim doesn't resolve positively.

This lack of recourse is a significant risk factor, as it leaves investors vulnerable to potential losses.

Investors may also face concentration risk, where a large portion of their investment is tied to a single claim, making them more susceptible to losses if that claim doesn't pan out.

Past performance is not indicative of future performance, so don't expect to replicate previous successes.

Investments in legal claims are highly speculative and carry a high degree of risk, which may result in a loss of the entire investment.

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Getting started with LexShares is a breeze, as you only need to invest $2,500 to get started, which is a relatively low starting price compared to other platforms for accredited investors.

This low barrier to entry makes it an excellent option for those looking to diversify their portfolio with litigation financing, which has a very low correlation to the stock market.

You can expect a quick turnaround time on your money, with an average reported time of 15 months from investment to case resolution, which is significantly shorter than other asset classes like real estate or startups.

Once you've invested, you can cash out after a case is concluded, and any proceeds will be transferred back to you in the same way you made your investment, whether that's through ACH or wire transfer.

To get started, log in to or create a MoneyMade account. Visit our LexShares platform page and log in to your MoneyMade account. You'll need to access your account to move forward with the process.

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Cashing out with LexShares is a straightforward process that happens after a case is concluded. Any proceeds from a successful litigation will be transferred back to you in the same way you made your investment.

To give you a better idea, LexShares invests a maximum of 10% of the expected recovery, which means they typically stand to earn 2x – 5x of the initial investment. With a 70% win rate for resolved investments, the potential for high returns is definitely there.

If you invested via ACH or wire transfer, you can expect the proceeds to be transferred back to you in the same way. This is a simple and efficient process that gets your money back to you quickly.

LexShares' average reported time from investment to case resolution is 15 months, which is relatively quick compared to other asset classes. This means you won't have to wait too long to see the outcome of your investment and get your money back.

LexShares offers a unique alternative to traditional investing. Investments made through the platform have a very low correlation with the stock market.

This means that LexShares can be a great way to diversify your portfolio. You can potentially reduce your risk by investing in a different type of asset.

The returns from LexShares are much higher than the standard 10% benchmark. This is because they deal in litigation finance, which can be a lucrative field.

However, there is zero secondary market for this type of investment. This means that you have essentially no liquidity on your investment.

You'll have to wait until the conclusion of a case to see a return. There is no standard time limit for litigation, so it's impossible to predict when you'll get your money back.