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ACCOUNTING

The Judgment Group Will Make Sure You Get Paid What the Court Ordered

Can it raise $5 million?
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The Pitch: "Every day, hundreds of small businesses and individuals win lawsuits against people who owe them money. But many of those court-awarded judgments are never paid. That's where we come in. We don't collect regular debts; we enforce court-ordered judgments. There's a huge difference. We electronically locate where debtors bank, work, and own property. Then, we file the legal documents required to get banks and employers to freeze the debtors' assets. We keep half of what we recover. Now we're preparing for a nationwide rollout. We plan to use most of the additional funds to hire staff and to customize our technology for each state, since each state has unique laws."


Company: The Judgment Group

Owner: Susan Wilson, founder, president, and CEO

Location: Stevensville, Maryland

Employees: Six

Founded: 2001

2007 Revenue: $500,000

2008 Projected Revenue: $10 million

Investment Needed: $5 million to hire new staff and build hardware and software infrastructure for a nationwide rollout

Clients: Individuals and businesses with court-awarded settlements of less than $10,000, mostly in Maryland

Recent Buzz: Winner of American Express and Count Me In's "Make Mine a Million $ Business" award; named one of Working Mother magazine's Best Women-Owned Companies for 2008


The Experts Weigh In

Find bigger fish

This sounds like a big market and a great opportunity. Wilson clearly has a passion for the business, and with a demonstrated track record of revenue, the company is ready to raise money. But I'd think very carefully about the target customers in this business. Signing up creditors who are owed a single judgment is a tough way to scale the company. The Judgment Group needs to focus on creditors with a large number of judgments in their favor. A credit card company, for example, has thousands of people who owe it money. Operational efficiency, such as running a strong call center, will be crucial to the company's success.

Sunil Dhaliwal
General partner
Battery Ventures
Boston

Build a brand

The barriers to entry for this industry are low, and there are a few competitors. So Judgment Group should invest in a brand that becomes the go-to name in this space. Five million dollars should be sufficient to build staff and infrastructure, but it seems light for sales and marketing. Wilson could seek partnerships with lawyers, who could refer their clients. I would also advise her to put marketing dollars where they're going to catch the attention of small businesses, like in trade publications and on relevant websites. Cash flow could be a problem as she expands nationwide, since the company doesn't collect any fees up front.

Mohit Daswani
Principal
FT Ventures
San Francisco

Start regionally

I think part of what has made the company successful to date is its clear focus: going after judgments in Maryland of less than $10,000. Going national will require significant investment in technology, personnel, and marketing. This could be a big risk if Wilson doesn't meet sales projections, which seem extremely optimistic. She would probably be better off showing she can expand to a nearby state with some additional bootstrapping or a bank loan. If she really can deliver rapid growth and profitability within a region, then she may be able to attract venture capital investors.

Lauren Flanagan
Co-founder and managing director
Phenomenelle Angels Fund I, LP
Madison, Wisconsin

Last updated: Jun 1, 2008




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