The firm plans to invest in US-based commercial and patent litigation and international arbitration
A new litigation finance firm, Arcadia Finance, has launched, bringing over $100 million in capital to fund lawsuits, Reuters reported.
The New York-based firm is led by a trio of former Validity Finance professionals: David Kerstein, Ronit Cohen, and Joshua Libling. Arcadia Finance plans to invest broadly in U.S.-based commercial and patent litigation and U.S. and international arbitration.
Kerstein, a founder of Validity and a former executive at Omni Bridgeway, expressed optimism about the firm's prospects despite challenges in the broader litigation finance market. "We're glad to buck the trend as others exit the industry," Kerstein said, acknowledging the current difficulties in raising capital.
U.S. commercial litigation funders, who finance lawsuits in exchange for a portion of any recoveries, faced challenges raising new funds last year. According to a report from litigation finance advisory firm Westfleet Advisors, institutional investors allocated money elsewhere due to broader financial market trends. The report noted that commercial litigation funders committed 14 percent less capital to new deals in 2023, following years of growth. Despite this, the industry remained stable, with a combined US$ 15.2 billion in assets under management.
Westfleet Advisors also reported a decrease in the number of active U.S. players in the industry, dropping from 44 in 2022 to 39 in 2023.
Arcadia Finance anticipates most of its funding deals to be between US$ 2 million and US$ 25 million. Kerstein declined to name the firm's investors but stated that multiple U.S.-based financial institutions, including at least one backer with billions of dollars under management, have committed more than US$ 100 million to the firm.
The co-founders of Arcadia Finance left Validity Finance in August 2023 after the firm reduced its focus on new commercial investments. Validity Finance had cut staff and shifted its investment strategy to focus exclusively on patent cases following a decision by its financial backer, TowerBrook Capital, to cease future investments in the firm.
