Divorce funding start-up Just Fund hiring after $86m raise from Xilium Capital, Startmate

Having already lent over $100m, a Sydney firm started by two dispute lawyers is hiring more staff to expand its divorce funding business which lends based on the settlement.

JustFund founders Jack O'Donnell, Andy O'Connor and Craig Carroll.

A start-up that helps fund the legal costs of Australians going through a divorce or separation has raised $86m as it surpassed $100m in lines of credit.

JustFund was founded by two former dispute lawyers and a fintech investor who saw a major opportunity to help people handle what they believe is often one of the most “emotionally and financially difficult” periods of a person’s life. An estimated 40 per cent of Australian marriages end in divorce.

But many marriages did not end fairly, especially when instances of financial abuse or domestic violence were a factor, said one of its co-founders Craig Carroll.

About 68 per cent of its clients had been exposed to financial abuse or control, and 74 per cent had been the primary caregiver of children. Its total client base is about 68 per cent women and 32 per cent men.

“I would say that the gender and the social inequality that we see … it is really significant,” Mr Carroll said.

“There are a lot of families where one member, either the husband or the wife, has had to stay at home and look after the kids.

“And their careers are different for it, their income earning capacities are different for it, and sometimes their financial sophistication is different for it.”

The other issue was when it came to fighting a former partner in court, the partner with the most means had a distinct advantage not only financially but having intimate and in-depth knowledge about the other person.

“Often when you separate, well, not really often but always, there is almost perfect knowledge. The other partner knows how much the other partner has, how much they earn and what access to cash they have,” Mr Carroll said. “And when a situation becomes combative, people do take advantage of that.”

Access to funding was one of the last barriers for people, including victims of domestic violence and other forms of control, Mr Carroll said, adding that some people spent years working up the courage to leave only to be disheartened when a lawyer informs them of approximate costs.

JustFund’s other co-founders are former lawyers Andy O’Connor and Jack O’Donnell, who met while working in London.

The pair first landed on the idea during Covid once they had come back to Sydney, and they then approached Mr Carroll and by 2022 the start-up had launched. It has now seen 2000 clients – the average age being 47 – and provided over $100m in lines of credit. The average line of credit is $40,000, although one case had gone as large as $1.5m.

The start-ups terms include a 9.8 per cent interest amount charged on how much had been drawn down in the client’s credit line, as well as a legal assessment fee and administration fee. Fees are only charged once a settlement has been reached.

Mr O’Connor said the idea behind the start-up was the premise that people could fair significantly better and see a more fair outcome if they just had access to a little funding.

“We can really have a significant impact on the experience of going through separation, which is a universally horrible experience. But we know that experience does bear particularly unfairly on certain people,” he said.

If you look at the statistics, that 40 per cent of Australian marriages will end in divorce, it highlights how many people might end up with an unfair settlement or inequitable legal representation, he said.

“That means every year more than a hundred thousand people in Australia will go through divorce, and so that touches about half of the population of the country. The scale of the problem was really significant.”

Mr Carroll said he’d come aboard after having personally lent money twice to family and friends who were going through a divorce and seeing the toll it had taken on them.

The start-up, which has an office on Bligh Street in Sydney’s CBD, has 33 staff but would soon be taking that number to 40 as more staff are brought on board through the new funding.

The funding was a mix of debt, with Global Credit Investments providing $75m, as well as $11m in mixed debt and equity funding from Xilium Capital with participation from Startmate, US-based Legal Tech Fund and impact investment firm Tripple as well as UpBank founder Dom Pym and Tractor Ventures head of capital markets Matt Allen.

The new funding round follows a $5.7m seed raise in April as well as $7m in initial debt funding from Xilium Capital which was incorporated into the total $75m amount.