AxiaFunder plans on reaching profitability in 2022 after widening its losses in 2020 while “investing aggressively” in the business.
The litigation crowdfunding platform posted a loss of £384,786 in the year to 31 December 2020, according to its latest annual accounts filed with Companies House.
This compares to a loss of £227,917 in 2019 and a £143,039 loss in 2018.
Cormac Leech (pictured), founder and chief executive of AxiaFunder, said the platform has been “investing aggressively to build the business”.
He added that the accounts do not reflect fees the platform will earn from cases that have been funded that will be successful and said he is “optimistic” of reaching profitability in 2022.
“It’s quite common for businesses to be in investment mode in the first couple of years to reach profitability,” Leech told Peer2Peer Finance News.
“We are investing aggressively to build the business; all the metrics continue to grow. We have funded cumulatively around £2m of cases, have won five and expect to announce imminently that we have won our sixth case.
“We are about to roll out a partnership solution for investors, we have launched a secondary market for litigation investments, we have over 1,100 registered investors and continue to acquire investors at an encouraging rate, growing our investor base at about 70 per cent per annum.
“We expect to fund a number of new cases in the coming months, we expect that the profitability of the business will improve as the volumes grow, and we are continuing to expand the team.
“We’re optimistic we will reach probability in 2022. Our revenue model is we charge fees when we raise new capital for cases and charge fees when the case results positively and as volumes on the platform grow and more cases are resolved positively, we expect to reach profitability.”
AxiaFunder has funded £755,000 in cases in the last six months and Leech said that he hopes to close a further £535,000 in cases within the next week, subject to legal agreements. This would boost the volume for the six-month period to £1.3m.
“This is a marked acceleration compared to the previous run rates of funding £1.2m over the preceding two years, so there’s good evidence that platform activity is increasing which is obviously helpful as we look to reach profitability,” he added.
In August, Leech said AxiaFunder was set to move to a limited partnership investment model, which is more tax efficient.