The rising rate of divorce, which comes with many challenges and hefty financial obligations, is creating a huge market that is yet to be tapped. Seeing the opportunity the challenges present, online divorce startup, Hello Divorce, is developing a platform to make it easier and affordable for people to get divorce.
The California-based company announced Thursday it has secured $2 million seed round led by CEAS, with additional funds coming from Lightbank, Northwestern Mutual Future Ventures, Gaingels and a group of individuals including Clio CEO Jack Newton, WRG’s Lisa Stone and Equity ESQ led by Ed Diab.
The company was founded in 2018 by family law attorney Erin Levine, so that couples getting a divorce could access “affordable meaningful legal counsel” and resources beyond online forms. Levine told TechCrunch that the billable hours model for lawyers is “an antiquated process” for consumers that want an easier and clearer path to divorce.
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“Right now, lawyers are the keeper of information, and clients keep paying until the divorce is done,” she said. “Divorce is more than forms. It is a challenging time, and most people need or want support. I saw a big hole there to use technology and fixed fees to put couples in the driver’s seat and take down that level of conflict.”
With this seed round, the company plans on rapidly scaling legal filing options across the U.S., improving its ground-breaking product, and giving consumers more of the content and services they need to feel informed and in control of their divorce process.
Hello Divorce provides software and accessible legal services starting at $99 for a do-it-yourself option or for up to an average of $2,000 for legal help along the way to finish the divorce process in a third of the time, and completely remote.
TechCrunch reported Levine saying that most people spend between two and five years contemplating divorce, and during that time are scared they will not be able to afford it, and if they have children, are afraid of losing them. Of those people, 80% won’t be able to access counsel. The larger percent of people in the divorce bracket creates growth potential for the startup.
Though the company is already profitable, Levine went after venture capital to be able to build an infrastructure and tap into the guidance that CEAS and other investors, like Lightbank’s Eric Ong bring to the table, saying “it is clear what I do know and what I don’t know.”
Ong said he met Levine through co-investors on the round, who told him Hello Divorce was something he would resonate with. Lightbank invests in category-stage companies, and he was drawn to what Levine and her team were doing.
“They are a combination of industry expertise and thinking outside of the box,” he said. “Eighty percent of people are still not getting meaningful representation, and we looked for technology that would provide a customer value proposition and we didn’t find one until Hello Divorce.”
The company plans to use the seed funding to scale legal filing options across the U.S., on product development and new content and services to educate people coming to Hello Divorce’s website.
The service is already available in four states — California, Colorado, Texas and Utah. Levine said the choice of initial states was strategic: She is familiar with California law, while Colorado has a complex system for divorce. Texas does not have a streamlined way for same-sex couples to get divorces, something Levine said she wanted to tackle, and Utah has a new regulatory scheme. Up next, she is expanding to New York and Florida, where she will launch in a bilingual format.
Since 2018, Hello Divorce has grown 100% year over year, with divorce success rates of 95% after starting the process on the platform. Over the past year, the company received 2,000 inquiries related to how to shelter in place with someone while contemplating divorce and co-parenting during lockdown.
“The inquiries increased about staying or going, and what divorce will look like,” Levine said. “It will be awhile before we see the total effects of what divorce looks like following the pandemic.”
Statistics show there are an average of 750,000 divorces in the U.S. each year, and the average total cost of divorce can cost anywhere between $8,400 to $17,500 depending on what state you live in. Overall, some sources value the divorce industry at $50 billion annually.