A new player has entered the litigation finance arena. Arcadia Finance, spearheaded by three former Validity Finance professionals, announced its launch on Tuesday. The firm has secured access to over $100 million in capital aimed at funding lawsuits.
Founders and Leadership Team
The founders, David Kerstein, Ronit Cohen, and Joshua Libling, bring significant experience to the New York-based firm. They plan to invest extensively in U.S.-based commercial and patent litigation, along with U.S. and international arbitration.
Industry Trends and Challenges
According to a report from litigation finance advisory firm Westfleet Advisors, U.S. commercial litigation funders faced challenges in raising new funds last year. Broader financial market trends led institutional investors to divert their money elsewhere, causing a 14% decrease in capital committed to new deals in 2023. Despite years of growth, the industry’s total assets under management remained flat at $15.2 billion.
Market Adjustments
The number of active players in the U.S. litigation finance market dropped from 44 in 2022 to 39 in 2023. Amidst these challenges, Arcadia Finance is optimistic about its prospects. David Kerstein expressed confidence in the firm’s ability to thrive despite the tough capital-raising environment.
Investment Strategy and Goals
Arcadia anticipates its funding deals will range between $2 million and $25 million. Kerstein, who previously founded Validity and worked at Omni Bridgeway, did not disclose the firm’s investors. However, he mentioned that Arcadia is backed by multiple U.S.-based financial institutions, with commitments exceeding $100 million. At least one of these backers manages billions of dollars in assets.
Background and Departure from Validity Finance
The co-founders departed Validity Finance in August 2023 after the firm scaled back on new commercial investments. Validity had to cut staff and focus solely on patent cases following TowerBrook Capital’s decision to halt future investments, as reported by Bloomberg Law in June 2023. Validity’s founder and CEO Ralph Sutton did not comment on the matter, and a spokesperson for TowerBrook also declined to comment.
