Berlin-based consumer rights platform LexFox has raised a seven-digit Series A round of financing led by Earlybird and Target Global, in the first significant investment by a leading VC in a B2C legaltech startup in Europe.
LexFox is developing an umbrella brand for its various services for consumers around rental, internet, and employment contracts. The company also plans to launch more verticals (deploying its proprietary technology) and to expand its service to other European markets.
Founded in late 2016 by Daniel Halmer, a lawyer and former head of legal and business development at Raisin, LexFox currently runs three independent portals in Germany:
Its flagship platform wenigermiete.de enforces tenants rights. Its services include reducing the rent with rent control law, claiming financial compensation for apartment defects as well as fending off rent increases, contract terminations, and cosmetic repair duties.
Mehrabfindung.de claims financial compensation for unlawful termination of employment contracts.
Weniger-internetkosten.de offers early cancellation and/or financial compensation if the internet provider does not deliver the contractually promised internet speed. Over 70,000 users have already evaluated their consumer rights issues via one of the three LexFox portals.
Since its launch, LexFox has focused on developing a proprietary software to automate claim enforcement and to build new verticals. The company has already gained significant traction with wenigermiete.de, which runs an aggregated annual claim volume of several million euros.
“Our proprietary technology has drastically reduced the time our case handlers and contract lawyers spend on every single case,” said Daniel Halmer CEO at LexFox. “With the new funding we will prove our software and marketing formula by expanding to new categories and regions.”
“Across Europe, there is an ever-increasing amount of consumer rights regulation. However, often those rights don’t arrive in the lives of the people – mostly because the claims are too small to run them through the practice of a traditional legal counsel,” added Halmer. “We believe technology can help us out of this trap: By drastically reducing the cost of evaluating and processing claims, it becomes economically lucrative to enforce even the smallest legal cases. This not only creates a completely new market but it also helps consumer rights into practice.”
Internet contracts exemplify the consumer rights challenge: The EU has warned that DSL providers systematically underdeliver on their contractual obligations. Subsequently, the EU has issued the 2015/2120 directive which, in theory, entitles consumers for compensation if providers don’t deliver on the promised internet speed. Since the release of the directive four years ago, there has not been a single known case of financial compensation. At the same time, the German federal agency for network infrastructure continues to note that German DSL providers underdeliver significantly in roughly one in four contracts.
“In the last decade we saw fintech startups create new standards of service where traditional banks failed,” said Shmuel Chafets, General Partner at Target Global. “LexFox’s vision is to do just this for traditional legal services: to bring these services to the tip of the consumers finger and provide the tools to handle them. With ML and automation to reduce cost and complexity of consumer claims, LexFox enables anyone to exercise their rights where they previously needed to retain expensive lawyers. Target Global is proud to support this team and this exciting mission.”