Farmer’s son from Bihar launched Fintech startup, made Rs. 3000 Cr in deferred revenue

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Coming from a village in Bihar where IIT is often mistaken for ITI, Kundan Shahi always aspired to be an entrepreneur. In Bihar and Uttar Pradesh, it’s common for people to get into real estate, earn big money, buy a Scorpio or Fortuner, and then venture into politics. Kundan wanted to make good money too, but in a different way.

“I always wanted to create something of my own, but not in a way that would make people whisper about how I made my money,” said Kundan Shahi, who was born to a farmer father and a homemaker mother.

Education and Early Career

He completed his schooling at a government school in his village and then earned a BCA (Bachelor in Computer Applications) from Muzaffarpur district in Bihar. After graduation, he moved to Delhi in search of a job to support himself.

Driven by the desire to do something significant and earn money to become independent and help his family financially, he literally ran away from home. Upon arriving in Delhi, he initially stayed with relatives but soon rented a place of his own to live independently.

He took up a job in a call center and was earning a monthly salary of Rs. 4500.

Introduction to Insurance and Entrepreneurship

“I also worked at EXL, a Noida-based company, in their quality and process experts department. During my time there, I assisted one of the largest US-based insurance companies by identifying potential risks and suggesting improvements for their business. This experience introduced me to risk insurance and writing, which I initially found boring but gradually became very interesting to me.”

This newfound interest led him to the idea of setting up his own insurance company, focusing on the substantial legal insurance segment.

“I wanted to start a legal insurance company in India to support businesses and individuals by helping them offload their financial risk associated with litigation,” said Kundan during the conversation with Empowering Indians.

Launching Advok8 and LegalPay

In 2016, Kundan Shahi launched his first startup, Advok8, an Indian legal tech company aimed at improving access to justice by connecting lawyers and clients and offering innovative funding options for lawsuits. However, it did not resonate with Kundan’s vision of what he wanted to create for the Indian legal ecosystem, so he began exploring other options and landed on LegalPay.

In 2019, Kundan and his brother, Chandan, launched LegalPay with the aim to assist businesses and individuals in offloading their burden of litigation expenses and gaining access to justice.

LegalPay’s Unique Approach

Being a fintech startup, LegalPay focuses on a specific and substantial market segment that traditional fintech companies do not typically address: the legal sector. Recognizing that one size does not fit all, LegalPay tailors its customer segments, user journeys, and services to meet the unique needs of this market.

LegalPay provides credit services designed to facilitate credit payments and resolve collection issues in legal cases. In India, the legal system is often sluggish, partly because the country is credit-thirsty. For example, if an MSME (Micro, Small, and Medium Enterprise) has a significant case against it, it might prefer to invest money back into the business rather than settling the case, which can generate higher returns.

Addressing Delays in the Legal System

In the Indian judicial system, the defendant often has significant power. If defendants believe a case is not viable, they might delay payments, exacerbating the backlog of cases. LegalPay addresses this issue by bridging the gap between litigants (those pursuing the case) and defendants (those who need to pay).

When a court order triggers a financial transaction, LegalPay steps in to facilitate the payment process. For example, if a party owes Rs. 1 crore, LegalPay might offer the claimant an upfront payment of 80 lakhs in exchange for their claim, then structure a deal with the defendant to repay this amount in installments over a year. This arrangement ensures liquidity for the litigant and manageable payment terms for the defendant.

Additionally, LegalPay provides funding for litigations when parties lack the financial resources to pursue their cases. This dual approach of facilitating payments and providing litigation funding helps streamline the legal process and reduce case backlogs in India. In the first year, the fintech startup had around 10 clients. In the second year, they grew to around 44 clients. Currently, they now have over 400 clients.

Growth and Financial Impact

In the first year, they handled claims worth 10 crores. The following year, they managed claims worth 20 crores due to limited capital. The next year, they funded around 70 crores.

Currently, LegalPay’s assets under management are approximately INR 4000 crores as deferred revenue, expected by March.

“The plan is to manage assets worth USD 1 billion dollars from INR 4,000 crores within the next year,” Kundan told Empowering Indians.

Introducing QuickSettle

QuickSettle offers a solution for B2B payments by providing credit lines to customers (who purchase or transact with other businesses for products/services) only to repay the vendors (who deliver goods and services to other businesses), ensuring 100% advance payments to businesses and eliminating the risk of credit and delays.

With flexible Buy Now, Pay Later options, it enables businesses to manage expenses ranging from working capital, marketing, legal, salaries, etc., boosting financial stability and cash flows. By slashing payment cycles and mitigating credit risk, QuickSettle promotes cash flow, customer loyalty, and revenue growth by up to 20%, making it a transformative tool for B2B operations.

Currently, QuickSettle has disbursed INR 200 crores. However, the goal is to disburse INR 1,000 crores annually over the next three years.