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11th Estate raises $2M for investor lawsuits, settlements

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May 30, 2024
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Illustration: Eniola Odetunde/Axios

11th Estate, a startup targeting claim payouts from investment-related settlements and fines, raised $2 million in seed funding led by Social Leverage.

Why it matters: Payouts from class action securities lawsuits were $4.4 billion in 2023 — the highest in 10 years — per a Woodruff Sawyer report.

  • The SEC separately paid out $930 million to harmed investors in its fiscal year 2023.

How it works: Consumers, RIAs and wealth managers sync up portfolios to 11th Estate. Based on their holdings, 11th Estate can automatically bring up cases and settlements relevant to the portfolio.

  • "Investors can be notified and get recoveries from every existing class action [they're eligible for]," says founder Stan Vick. "Most traditionally just join one."
  • Apple investors, for example, might be eligible for payouts from a $490 million settlement the company agreed to this year. That lawsuit alleged CEO Tim Cook misled investors about iPhone sales in China.
  • Investors — including non-U.S. parties — can join existing class action lawsuits through the platform.

Yes, but: The company does not manage claims related to bankruptcies.

Zoom in: 11th Estate simplifies the claims process by doing the paperwork on behalf of users. In return, it takes a 20% cut of the payout.

  • Over the past 18 months, the company has processed about $5 million in settlements.

Between the lines: 11th Estate's total market size is constrained, given the limited amount of total payouts disbursed each year. But Vick believes the settlement figures will grow — especially as more retail investors enter the market.

  • "The market is empty right now," he says.

The bottom line: Fraud lawsuits tend to rise during economically challenging times for companies. A number of young startups have emerged on that darker macro trend.

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