FULL TRANSCRIPT
Slava Rubin (00:00)
In this episode of Smart Humans, we talk with Louisa Klouda, who's the CEO and founder of Fenchurch Legal. We discuss the world of litigation finance. What is it? How can you get involved? What are the opportunities to make money in big cases or in small cases? We discuss where the global economy is headed from somebody living in the UK. And of course, we have the predictions for three years out.
Slava Rubin (01:41)
Hello and welcome to the latest episode of Smart Humans. Very excited for today's guest. We have a topic that we don't typically talk about, which is litigation finance. And we have one of the experts in the world, which is amazing, Louisa Klouda who's CEO of Fenchurch Legal. Welcome,
Louisa (01:57)
Yes, Slava thank you very much. Great to be here today.
Slava Rubin (02:01)
Absolutely, obviously we're wanna dive into this new asset class, but first we need to get to know you. So where did this all start? Let's go back to your childhood, whether it's your schooling, whether it's work, how did you get into the world of alternative assets as a whole?
Louisa (02:11)
You
Straight after university, believe it or not, I studied maths and economics in the UK and did an internship throughout my university. It was a kind of a prop trading firm. So we traded currencies and commodities, very fast pace, of throws you into the deep end of the investment world, but it definitely wasn't for me. That's what it took me.
And I think I was definitely more drawn to longer term research led investment strategies rather than real time trading. So I moved down to London after university and my first job was in a boutique wealth management and corporate finance firm. And one of the things they were quite big on was structured debt and they provided that on behalf of SMEs. So that's where I kind of got my first exposure to private
credit, if you like, and I really love the strategic side of it, looking at the risk and structuring deals and raising capital for them. And so that's how I kind of got into the private credit space. And whilst doing a lot of capital raising and raising debt, structuring debt for those type of clients, I discovered litigation finance.
And so I saw a huge potential in the market. I did a lot of research and what I kind of found is that a lot of funders were doing in a very risky equity style way. And so what I wanted to try and do is take my kind of secured lending and private credit structured debt experience, if you like, and apply it to the kind of litigation finance world. And that's
how I ended up founding Fenchurch Legal and the idea behind it is applying the secured lending kind of model to high volume consumer claims.
Slava Rubin (04:09)
Amazing. And how long was it from ending university to starting your company?
Louisa (04:16)
Five years, so pretty fast.
Slava Rubin (04:17)
⁓ yeah,
that's pretty fast. What is it do you think in your background or your childhood led you to be so entrepreneurial so quickly?
Louisa (04:26)
Ooh, I definitely come from a family of entrepreneurs. But I think it was university and become part of the investment society that didn't exist, that there was actually a finance society in the university. And there wasn't an investment society. So that was very kind of accounting based. And there was two or three of us that really like from a young age wanted to start investing. And we thought we'd form
an investment society at university, which we did. And that's how we got into the kind of internships that we all went down to London to do and just started investing. And I think off the back of investing ourselves into other people's companies, we got attracted to setting up our own businesses. And it's about three or four of us in that group that all have our own businesses now. it's definitely, definitely investing made us, us, us into entrepreneurs.
Slava Rubin (05:17)
Amazing. That sounds like a good cohort. And when you're saying investing, were you doing like angel investing or startup investing or was it similar type of private credit type investing?
Louisa (05:27)
No, but back at university, was stock market stuff. That's kind of what we were taught, we were, yeah, public markets at the time. It's only kind of afterwards when we started, guess, getting a bit more educated that we started looking at the more private side of stuff. I don't think you really get taught about private placements and investing when you're younger, but going into industry, I think you get exposure.
Slava Rubin (05:32)
of public markets.
Louisa (05:52)
to things that not many people in the kind of real world investing market get access to, which is why I think it's really important to educate people about alternatives, because it gives people access to investment products and companies that people don't otherwise know about.
Slava Rubin (06:11)
I completely agree with you. That's such a point. That's why we have this podcast. And it's awesome that we're able to have people like you to share that. I mean, we don't get taught when we're younger about these alternatives. This really is just about, you know, a 60-40 allocation of 60 into the public markets, 40 into bonds and zero into privates or alternatives. So let's talk about you for a second, which obviously you have significant exposure for your net worth into your own company. So let's just put that aside. And how do you like to invest your own money?
Obviously, again, separate from all the exposure that you have, which is probably significant to your own company. Do you have a 60-40 public markets bonds zero alternatives? Or I'm guessing it's probably not that mix. It's some sort of other percentage between the three. What does that look like for you?
Louisa (06:54)
Yeah, definitely. I mean, my two principles
are investing what you understand. I don't like taking blind bets and diversification is key. think regardless of your risk tolerance, you want diversification. So I avoid things that I don't understand basically. So crypto, I hold a bit, it's speculative, it's a very small part of my portfolio, high risk, high reward, but I don't understand it. So it's going to always be a very small part of portfolio.
Same with industries that I don't understand or know a lot about, like healthcare industry. It's never been something I've been interested in. I don't understand, so I'm not gonna have high exposure there. The things that I do invest in, again, probably 60-40 in the opposite ways. I'd say 40 % in public markets split between...
low risk kind of index trackers or funds for which are there for kind of low to medium term risk, but for the long term that I don't really touch. And another 20 % in more kind of stock picking your typical public market stocks that I find like and kind of follow. And then the other 60 I'd say is split across alternatives.
Private businesses that I like to invest in. I love the early stage hustle and being part of the journey. So whether it's kind of businesses that I set up that other people operate or businesses that I see I like and kind of want to put some money in. And property. I think it's something that everybody should have as part of their portfolio, different jurisdictions. Property. Property, sorry. Property.
Slava Rubin (08:33)
Which one was that? Did you say anthropic? property, property, property. So
what percentage of the 60 % do you think is property?
Louisa (08:41)
Probably about 20-25
Slava Rubin (08:43)
So like a third of the 60. So you like startups and then property, anything else?
I mean, in that 60%.
Louisa (08:51)
Early stage businesses. my alternatives are probably split across private businesses that I own or I'm in a kind of majority shareholder in or other investments that I put in as a VC style investment.
Slava Rubin (09:09)
How many other businesses are you like the owner of that it's kind of like your business that somebody else is running? It's very interesting strategy.
Louisa (09:17)
Two, as a majority and then one that's currently being set up, it's very, very early stage kind of legal tech firm that I'm going to be part of but not majority.
Slava Rubin (09:33)
So, I mean, you're a great example of the traditional 60-40 public markets, bonds, is maybe not the contemporary portfolio for everybody. So that's why you're an awesome guest. Anything relating to art or collectibles, or is that just something you ignore?
Louisa (09:37)
Okay.
Not really, no.
Slava Rubin (09:50)
All right, perfect. So you have a really interesting background and obviously have a view into what's happening in the world. What do you think of today's market? And this is just like a massive general question. So in terms of the stock market, the economy, geopolitical, inflation, jobs, know, where we're headed, what do you think the coming three to 12 months looks like? What's the trajectory of our global economy and what are the opportunities right now?
Louisa (10:15)
Yeah, volatility is probably the only word that can describe the recent years and upcoming years. I think we're seeing things in the markets that nobody can really explain or predict directly. I think that the long term high interest rates and inflation have obviously killed a lot of opportunities for people that expected out there all the geopolitical risks, I think.
massively across the world at the moment. But that also does come with a lot of opportunity. So I kind of see investors in my mind as two groups. You've got your active investors and your passive investors, the passive being just someone that's putting money into the S &P long term and knows that it's going to
You'll yield a good steady return over the long term, but don't look at it or expect anything in the short term. And then you've got the people that are in and out of the markets, whether that's public stocks or businesses, that the, I guess, general market conditions are going to affect the short term returns. And if you have the time and the knowledge, I guess, to put into...
understanding businesses or investing in businesses, you can put your money to work, get good returns and compound your yields over the years.
Slava Rubin (11:40)
So if I had to put you on the spot, are you thinking that interest rates are going to be coming down in the coming quarters? Or do you think they're going to be going up? Do you think inflation is going to stay flatish or go down? Or do you think we're going to get back to some inflation numbers going up? Do you think we're going to get to all-time highs in US or global economies? Or do you think we're set for potential recession and we're going to have a little bit testing lows, et cetera?
Louisa (12:09)
Yeah, I definitely think there's a recession looming and it has been for a while now, unfortunately. I think COVID, if COVID hadn't happened, we would already be in it or already potentially coming out the other side of it. But I think that just kind of threw a spanner in the works that nobody obviously predicted saw coming or knew how to handle.
I think since markets haven't stabilized, they've tried to and they've failed. But we've definitely got a recession looming, which is obviously not good for many, many reasons, but markets have to correct themselves. I think interest rates have to come down. I don't think they're sustainable at the rates that they are and inflation needs to get under control. I don't think it's as easy as it
an easy fix as it has been previously because of all the government debt and the instability across the markets. I guess that's what the governments are trying to achieve right now and I hope they do.
Slava Rubin (13:09)
Absolutely. So is your prediction that interest rates a year from today, if we have you back on, are down? And if yes, how much do you think they're down?
Louisa (13:17)
At least a percent, I hope. Yeah, yeah, 100 base points.
Slava Rubin (13:20)
Meaning like 100 basis points.
For that side, significantly.
Nice. The inflation one is the tricky one, right? Because we want to get inflation down. But yeah, for various reasons, inflation still seems like it wants to, if not stay flat, potentially go up. What's your thoughts on that? you you're a serial entrepreneur, obviously you're dealing with money and all kinds of like lending and such. How do you think about that as it relates to, independent of your actual company, right, that you run? But how do you think about, you know, thinking about the interest rate?
Louisa (13:36)
Yeah.
Slava Rubin (13:55)
and inflation.
Louisa (13:55)
Yeah,
mean, the interest rates across the world at the moment have massively impacted us as a business in the sense of return that we offer to our investors. A lot of people think it's not related, but if I'm offering fixed term returns at 10%, but the banks are offering five,
then my opportunity isn't as attractive anymore. So it's definitely impacted us as a business. So naturally we kind of have to price that into the world, into our investment opportunity, but then it's naturally priced across the world as well. People are saving at higher interest rates. People are not using their money and we need them to use their money to ultimately bring inflation down. So I think we...
The governments need to lower rates, they need to get the public spending again, but inflation at the rates that it is, it's not sustainable. People are not making ends meet. People are not able to spend, invest, and the money in the economy is not flowing. And I think that's a systemic issue that needs to be, I guess, looked at at the root of the problem.
bringing inflation under control, think is the key priority that we need to be looking at at the moment.
Slava Rubin (15:16)
All perfect. All right, let's get into litigation finance and Fenchurch Legal. What is litigation finance? Let's just start there. And what is it that your company does as part of that ecosystem?
Louisa (15:30)
So litigation finance as a, I guess, more general topic and industry, the point of it is to fund the legal costs and disbursements of a legal case. You've got claimants that want to bring lawsuits to fruition. It's very costly and time consuming and not every claimant has funds to do so.
in order to, I guess, enable them the access to justice that they require, people like us come into play. The market is kind of split into two. You've got your large ticket, large scale lawsuits, the big fancy lawsuits that spread across the news that most people hear about. And you've also got your small value
consumer claims. Looking at the UK market for a moment. So those two sectors of the market are very different in the sense that the big cases are super, super expensive. They'll take years sometimes to complete and the settlements, if one, are massive. On the other side of the market, you've got small claims that might take nine to 12 months to settle, very small value.
anything up to 10, 15,000 pounds. And it's very much a process driven claim. There's not much kind of, I guess, adverse risk to it. The big litigation side of things is an industry that is looked at by a lot of kind of equity style investors. So the typical people that will put in five million and expect a three, four time return back.
if there's a big settlement because they tend to structure their returns as a percentage of the winnings when the actual case settles. The other side of the market, it's very much standard return. So you get your money back plus a return that's pre-agreed regardless of whether the case settles or doesn't.
They're the kind of two sides of the market out there at the moment. It's a massively evolving industry. It's quite new. It's not been around forever growing. And yeah.
Slava Rubin (17:42)
Yeah, so somebody did something wrong, supposedly, and then the other party wants to try to sue them to get compensated for the thing that went wrong. For some reason, that other party might not have the money, right, or have the appetite or the risk to want to lose. So they basically get somebody to help fund it, right? So it's kind of like people needed to find money to make a movie because they don't have the money themselves to invest in the movie. Instead here, they're creating the lawsuit and then looking to generate the returns. The movie might flop and they might make no money.
Louisa (18:08)
Okay.
Slava Rubin (18:11)
the lawsuit might go backwards, right? And they might not win. So they might not make any money. And if they do win, there could be a huge return, just like a big blockbuster movie hit sort of thing. Is that right?
Louisa (18:12)
Next slide.
Exactly.
Yeah, very similar. Never thought of analogy before, but it is very similar.
Slava Rubin (18:26)
See that? You're in the movie business.
So yeah, I just want to simplify for our listeners. And where do you sit with Fenchurch Legal as part of, you said there's the big cases and then there's the small cases. Are you in one of those?
Louisa (18:38)
Yes, we only focus on the lower value consumer claims. So your typical consumer redress claims. You've got a huge number of consumers in the UK that are seeking compensation for a specific issue that's occurred. Taking financial mis-selling cases, for example. You've got big banks or...
Sorry, taking the missold car finance agreements at the moment, which is a massive kind of industry in the UK that's blowing up and it's the next big thing happening. Motor car finance agreements that have been sold to the end, to the end client, sorry, that bought a car. They got some form of credit from the bank via a broker. The brokers have taken
massive commissions, they haven't told the clients about them. There's now basically a financial miss-selling claim due to the client for compensation because they've taken a credit facility on terms that they didn't really know who was getting paid what out of and potentially have been financially impacted off the back of it. What happens with these types of claims is that
two, three, four claims get processed. They go to court, legal precedent is set, and then everything follows from that. So it's a very clear path on how it's done, who the defendants are, how it needs to be processed, how the compensation is calculated. So what we do is we back those type of cases en masse. We don't go out looking for
cases left, and centre with the claimants saying, what case are you doing now? Let's have a look at the prospects. That's not what we do. That's not our area. That's still a very profitable area. It's not what we focus on. We focus on finding the high volume, low value consumer claims that are managed by kind of small to medium sized UK regulated law firms or specialised claims management companies.
and we've structured our facilities in a way of kind of a secured lending revolving credit facilities with them.
Slava Rubin (20:52)
So there's been a case, or four as you say, or several, and now it's set the precedent. So now it's like a formula, which is if you have this situation, this was what went wrong, you paid this much too much, and because of that, you have this type of car with this type of lender, you deserve this much money back. Is that the sort of thing?
Louisa (21:11)
Exactly. mean, to get an idea of how the kind of lead generation of claimants occur is big adverts going, did you have a car finance agreement between this and this year with these lenders, et cetera? If you did and your car was worth more than £15,000, then you're eligible for a claim.
Slava Rubin (21:22)
Thank you.
Louisa (21:33)
They come to them, they qualify them, they go through a vetting procedure to see if they actually did have the car finance and if so, the value of it. And then it's a process. It's all protocol based and process driven. It's not litigation really. Again, most cases settle pre or post issue. A very small percentage actually get fully litigated and go to trial.
whilst we use the word litigation because that's the kind of its full nature of it. It's more or less a process driven claims handling procedure.
Slava Rubin (22:08)
Got it, so at your company, how many of these standard types of things that you're just trying to find more clients for do you have? Is it just that one car one or is there like 11 that you're working on all at the same time?
Louisa (22:20)
Different types, again, from a diversification point of view, you don't want all your eggs in one basket. So we do housing disrepair claims, which is basically social housing tenants suing the council for not taking care of the properties when they should. We've got Ministry of Defence hearing loss claims. We've got personal injury claims, which are quite huge in the UK.
So lots of different types of things. think we've got four or five at the moment. We're actively looking at a few more. So sub 10, but not just one.
Slava Rubin (22:54)
Got it. And can you give us perspective on the size or scope of your company? Like how many deal, how many, you know, litigations have you done? How much money have you returned? How much client, like whatever kind of numbers you use to talk about your size.
Louisa (23:08)
Yeah, we've, I think we've raised and deployed over 45 million now. We've been going for five years. We set up in early 2020. So raising deployed over 45 million. And that's been across about 15, 16,000 claims. So our typical loan that we issue against the claim is about three to 4,000 pounds. So quite small value, as I mentioned, at very high volume.
We've returned over 20, 25 million to investors over the years with great returns. What I don't know if I mentioned earlier is that every case that we fund is insured. So as I mentioned with the kind of large ticket stuff, if you win, you win big, but if you you lose everything, like there's no return.
we do is structure the loans with a standard return regardless of success or not because we kind of predict the success rates of these cases at mass rather than on a portfolio basis rather than a case by case basis and we know that the percentage of success is above 80-90 percent so that 10 percent that doesn't actually succeed is able to be paid back without causing financial loss to anyone.
in the parties. But what we do do is get insurance on each of these cases. So there's a specific type of insurance for this industry. It's called after the event insurance. And it basically ensures two things. It ensures all the costs and disbursements that you spend on a case. So the law firm spends £5,000 paying for experts, court fees, premiums, etc. They can reclaim that back if the case actually fails.
And it also ensures adverse cost. So if it does actually go to trial and the other side wins, they are liable for their costs. So it also ensures that. So for that 10, 15 % that might actually not succeed, there's insurance in place to cover your principal capital so you're never at loss.
Slava Rubin (25:11)
So does that mean no matter what I'm getting my money back, but I'm not guaranteed to get my positive interest back?
Louisa (25:19)
Yes, so the way we structure our facilities is that the law firm is still liable to pay that interest back to you. That's not necessarily the case everywhere. We've done that, I guess, in exchange for a less return because we care about getting our money back and our interest back. So in most circumstances, you've priced that into the risk and you're always getting your return back in either situation.
Slava Rubin (25:44)
So either, no matter if I win or lose in my investment, I'm still getting my principal plus extra interest return. Well, that sounds very good.
Louisa (25:47)
Get him.
It should, yes.
That's why we do it.
Slava Rubin (25:56)
You almost, given the scale, it almost seems like you're an insurance company yourself. Right? So I'm not saying that you're actually an insurance company because you have the after the event insurance behind you, but you're working not on one off kind of risk assessments, but it's really working through the risk at the aggregate level. I mean, you're doing three, 4,000 cases a year, it seems like. So that's like significant. And it's really the standard bell curve that you're kind of trying to understand.
Louisa (26:02)
And yeah, we underwrite.
Slava Rubin (26:22)
you know how this is all going to play out almost like an insurance company like an actuary.
Louisa (26:26)
Yeah, that's exactly what we do. Underwriting risk on a daily basis is exactly what we do. I mean, our principles within the business is underwriting upfront and underwriting and monitoring on an ongoing basis. Our work doesn't stop once we issue a loan. If you're a lender against property, you lend money, you get a valuation of the property and then that's it. Unless the markets massively crash, your property valuation is not going to
deviate by 20 percent, which you've probably lent against loan to value. So you're kind of always covered. with what we do, our our asset is the case, the progress of the case, the settlement of the case is what we need to monitor. So we underwrite the law firms upfront to make sure that we like them as businesses, they're financially strong.
They operate well, they've got experience, they've got track record and once we issue the loans we then monitor the cases and the progress of the law firm overall to make sure that they're operating them properly, they're pushing the progress of the case properly and they're making the returns they needed to ultimately pay us back.
Slava Rubin (27:38)
Yeah, I just wanna state something that might be obvious or not. You're not the actual lawyers doing 4,000 cases yourselves. Can you give us some perspectives to do that 4,000 cases a year? How many law firms are you working with or giving money to?
Louisa (27:53)
We work with about six at the moment, active. I think that the 15,000 cases is probably split about across eight or nine law firms rather than the six that we've got active at the moment. But to give you a bit of perspective, a law firm that's like medium size that you've got about 50 to 60 people can probably handle anything between six to...
8,000 cases at a time.
Slava Rubin (28:19)
Wow, that's awesome information. So is this available to me if I wanted to be an investor with you?
Louisa (28:26)
So the market typically has been institutional financed for years now because it's not something that many people know about. mean, before I got involved in the industry, I had no clue what litigation finance is. a very new evolving market that people are definitely getting into. What we've done here is structure an alternative investment offering for people that...
want to invest at lower values. So your typical ticket size on this type of investment is five million and above, which means that people like us can't invest smaller values as part of our personal portfolio. So we've created a fixed rate loan note offering. It's structured with an alternative investment.
where people can actually invest anything from £10,000 upwards in multiples of a thousand for a set return.
Slava Rubin (29:21)
Amazing. So £10,000 minimum. Is this for UK only or can US investors involve or global or
Louisa (29:29)
Yeah, it's a global offering and anyone that's considered a qualified investor, they need to understand what they're investing in and can participate in something like this.
Slava Rubin (29:40)
What's a qualified investor? Is that the equivalent in the US as an accredited investor? Yeah, okay, great. So basically like a million dollars in net worth or like 250K salary, something like that.
Louisa (29:44)
Accredited, yeah.
Correct, experiencing alternative types of investments before.
Slava Rubin (29:58)
So being selfish here on behalf of the listener, so if I myself want to give you $25,000 tomorrow, I can invest that.
Awesome, and what should be the kind of returns that I should expect and what's my liquidity opportunity there? Or what's the lockup or how does that work? So let's just assume my 25K, walk me through, you're the best salesperson, you're the CEO founder, so sell me all my 25K, what can I expect?
Louisa (30:16)
Yeah.
So we've got three different offerings. We've got a two year or three year product. And each of those two and three year products has an income or a growth option. so interest rates that we offer to investors range between 11 and 13%. So 11 % for the fixed term and income option. So you've got
your two year, if you fix your money for two years and require a quarterly interest payment, you'll get 11 % per annum for two years paid out quarterly and then your money back at the end of the two years. Similarly, for the three years, you'd get 12%. And if you wanted the two year fixed end product, but you didn't want any interest payments and you want all your capital returned at the end, you'll get 12%. And likewise on the three year product, if you wanted
to lock in for three years and get all your interest paid at maturity at the end of the three year term, you'd get 13%.
And that's all like net net paid to you. So there's no fees, nothing else hidden. So 13 % on your on your on the value of your money.
Slava Rubin (31:31)
So using round numbers instead of 25, so we don't have to do math. If it was a hundred K investment, I'd be getting a quarterly payment on the 11 % for the two year. I'd be getting a quarterly payment on that, on that hundred K, right? So what is that? $11,000 for the year. So it'd be like $2,750 per quarter. And I'd be getting that each quarter. And then I'd be getting my hundred K at the end of the two years. Is that right?
Louisa (31:55)
Yeah.
at the end of the two years, yeah.
Slava Rubin (32:03)
Or if I was willing to hold and not get that quarterly payment, would get $12,000 per year. So I would get $124,000 in two years at the end. And that's after fees, after everything, I would just get that one. Okay, pretty clear. So let me ask you an obvious question since, mean, why shouldn't I be doing this? What's the risk here? What's the potential that that's actually not gonna happen? The default, the...
Louisa (32:09)
fountain.
at the end. Yeah. Yeah. And I think the only.
Slava Rubin (32:29)
you know, this is gonna turn into a zero or this is gonna turn into 88,000 instead of 100,000, you know, 124. What's the potential of that? I mean, that's kind of the catch, right? It can't be perfect.
Louisa (32:37)
Yeah,
of course. think with any investment, there's obviously risk. We don't offer risk-free returns. That would be amazing. The risk is obviously us not performing as a business, or the end law firms underperforming. So we're here to manage that risk. So there's lots of risk. There's risks of the case failing. We put the insurance in place. There's risks of the case not progressing or going AWOL.
We monitor the cases on a monthly basis. There's the risk of a law firm going under. We move those cases and take them elsewhere to make sure that they're looked after by another solicitor. Not an easy process. It happens. We have to have backups in place. If for any reason something was to happen to our business as an operator, there'd be administrators put in place that would recover people's money and ultimately get back their return.
What we're doing is kind of a form of asset back lending. So there's always an asset there to secure people's money. So the worst thing that could happen is, I always say to people, is delay. If we are late on receiving the money, then we obviously price in a big margin. It's why we take people's money. There's obviously a big margin in between the two and we reinvest our...
our returns to ensure that the margin in the business is large enough that if there is any bad debt or delays, we can price those in. For the five years that we've been raising capital and deploying capital and taking money from investors and repaying investors, we've never defaulted on a payment. We've got 100 % track records so far.
Slava Rubin (34:13)
mean, it can be better than 100%, so that's pretty good. Is there anything, are you thinking to go into these big cases or are you just like, we know the systems, we wanna do it at scale, we're gonna stick to what we're good at and that's where there's a lot of money to be made?
Louisa (34:26)
Yeah, we know what we do. We like it. We understand it. And it doesn't require a lot of legal underwriting. So we see ourselves as a finance company. I you mentioned before, we're not a law firm. We don't employ hundreds of lawyers. We outsourced the review of the case types that we look into and we monitor the industry changes and the legal precedents and the kind of key cases out there with specialists in the industry.
But we don't have five lawyers looking at cases all the time and legal opinion. So we'd have to structure our company totally different and set up a new department to do that. At the moment, we've got far higher demand for money from our current borrowers and pipeline borrowers than the money to deploy, which is why we're actively capital raising. So for the time being, as long as the demand's there, that's what we're going to stick with.
If we decide to expand, do so with a specialist team.
Slava Rubin (35:26)
Awesome. And then is there anything else that you'd want to share with the listener about litigation finance or, you know, the pros and the cons of what we're discussing?
Louisa (35:34)
The only thing I wanted to mention on the investment side of things is that we actually take money in US dollars and euros as well. And we as the company take the currency risk. So if somebody wanted to invest in dollars, they can without taking that currency risk. So I know that's quite an important factor for many investors cross-border that want to invest into the UK. I guess pros and cons on the market as a whole.
The market's massively evolving. you Google these types of things like litigation finance or the PCP claims or the latest big actions like Uber or Volkswagen, you'll see the interest and the growth in the market and how many people are now kind of looking into that. I we've got a couple of the big players in our industry that have listed on public markets.
there's definitely more awareness in the industry by retail and institutional investors. They do focus on the bigger cases, which obviously have the kind of binary outcomes that we mentioned, but as an investor, it depends on what you want. Do you want the kind of more predictable returns, stable returns? Then what we do is definitely more something that you should look at if you want the more kind of VC type equity returns then.
the bigger cases are for you.
Slava Rubin (36:52)
All right, great. You're obviously a smart person and probably cover a lot of content. We love to always learn new stuff. What is it that you to watch, listen to, read? What keeps you informed? What are those secret nuggets that you get to look at every day or a week or month? Share some of those content tidbits that you like to navigate.
Louisa (37:04)
you
Yeah, I definitely prefer to read than listen. I think I'm more of a visual person. I find it lot easier to understand things, especially complex when I'm reading. I do love a kind of quick straight to the point newsletter. I don't always have the time. I'd love to have to do my deep research into things. So what I kind of try and look for is ones that give me kind of insights that are sharp and actionable that I can
pick on. There's one that's called the private debt investor that I think we look into quite a lot for the types of deals that are similar to ours. Short squeeze is one I use quite a lot. ⁓ I read a lot of yes, similar, again, not only alternatives, public as well.
Slava Rubin (37:56)
That's newsletter.
Louisa (38:03)
and Finamide is another one that I use quite a lot. But I read a lot of books, if I'm totally honest. do love a good... I love classics like Warren Buffett classics, so I'm definitely up there. But my recent favourite was the one called The Psychology of Money. I don't know if you've heard of it.
Slava Rubin (38:12)
Give us a book or two.
Louisa (38:27)
I think it is a very simple kind of basic book, nothing in there will blow anybody's mind, but it's such a powerful reminder of how your mindset and your behaviors just matter so much more than spreadsheets sometimes. And it's definitely part of like how to build long-term well.
Slava Rubin (38:47)
Said from a math degree, so it must be interesting. So the final question, we like to put our people on the spot here, which is give us, we call it three years out, a for three years out. One public markets pick from the stock markets and then one private alternative investment. So the more specific with ticker symbols and et cetera, the better. So what would be your two picks and why? So feel free to go with your public pick first. What would be your public?
Louisa (39:05)
Thanks.
Public pick? It's got to be an AI pick. One that I have recently been looking into is called Big Bear. It's a kind of niche in defence and logistics. It's quite small cap and I would say very speculative and volatile at the moment.
It's one I'm very closely looking at and I'd take a bet on.
Slava Rubin (39:34)
Why do you like it?
Louisa (39:35)
Why do I like it? I've been looking into AI a lot recently and I think the defence side of things with what's going on in the world at the moment is something to very kind of closely look at. I also think that they've got kind of government backed contracts, which is always a big positive for me.
Slava Rubin (39:55)
Perfect. And then in the private markets world, outside obviously saying we should invest with you, which all of our guests obviously think that's a good idea. What would be a private markets pick, whether it's art collectibles, private credit, crypto, real estate, a startup, anything that's not public markets.
Louisa (40:02)
Okay.
So cyber security is another kind of industry that I'm looking very closely at the moment. If you go in private that's not startup, because if it's startup, it's very specific to the people, I think, and the very core business model that you're looking at. If we're looking at slightly larger private, I'd go with something that's got an IPO.
anticipated at some point. I'd probably go with something with recurring revenue. think Arctic Wolf at the moment is a strong one. Manage cybersecurity, of typical mid-market firm.
Slava Rubin (40:56)
Alright.
Do you have any sense of what they're priced at these days?
Louisa (40:58)
Big Bear something like under five dollars at the moment. Can't remember exactly how much.
Slava Rubin (41:05)
But I mean Arctic
Wolf, they, I can't think of any top, are they like 10 billion or 5 billion or 20 billion?
Louisa (41:11)
market size. ⁓
Slava Rubin (41:13)
Yeah, like their
market cap. We'll figure it out. But it's a very interesting pick. We haven't heard arctic wolf.
Louisa (41:18)
Yeah, they're a billion dollar company. They're not small and they're definitely, hopefully planning for an IPO. There's rumours out there.
Slava Rubin (41:26)
Okay, perfect. Well, we have covered quite a bit. Everything from graduating from uni to starting five years later, your amazing firm. You were in the investment club and that obviously got you started with public markets, but you're already were thinking about how to do other stuff. I love the fact that you said that, you we don't teach about how to get into alternatives when you're young. So you have to educate yourself and get into it. You like to invest into what you know and you like to diversify. You're definitely not into the traditional 60, 40 old school public markets bonds.
Louisa (41:37)
you
Slava Rubin (41:56)
But instead you flip it 40 % public and 60 % into really interesting private investments, whether it's your own startups, other startups, property, et cetera. It's amazing that you're a serial entrepreneur. You do think that there is a recession looming. So that was great. You do think interest rates have to come down probably by a hundred basis points and we need to get inflation under control. So, Fenchurch legal, super interesting. You've been around since 2020 already $45 million deployed, 20 to 25 million, sorry, pounds deployed.
Louisa (42:02)
.
Slava Rubin (42:25)
20 to 25 million pounds already returned. Thousands of cases, actually 15 to 16 thousand cases, about
3,000 pounds per case, which is super interesting. 80 to 90 % success, and you practically like an insurance company because you're pretty much guaranteeing the returns, which is fascinating. Anybody can join from around the world. You can invest in dollars or in euros, $10,000 minimum.
And you have different products whether it's two to three year lockup quarterly or get all your money returned at the end 11 to 13 percent various ranges It does sound super interesting. You gave us a bunch of great content And of course the psychology of money was your pick up for the book and you had your amazing picks for three years out Big Bear which is an AI company and then Arctic Wolf, which is a major cybersecurity company. Thank you very much
Louisa (43:13)
Thank you very much.
