ClearGrid Secures $10M Investment to Enhance AI-Driven Debt Collection in MENA
Modernizing Debt Collection in Emerging Markets
Debt collection in emerging markets often seems archaic, resulting in significant costs and a decline in trust among borrowers. As the demand for consumer lending rises and regulators advocate for fairer practices, many traditional collection agencies are finding it challenging to keep up. A new player, ClearGrid, aims to transform this landscape by integrating artificial intelligence (AI) into debt recovery processes.
About ClearGrid
Founded in May 2023, ClearGrid is a startup based in Dubai that recently gained considerable financial backing, amounting to $10 million in funding. This includes $3.5 million from pre-seed and $6.5 million in seed funding. ClearGrid’s mission is to assist banks, fintech firms, and lenders in recovering debts in a more efficient and less aggressive manner. Co-founder and CEO Mohammed Al Zaben views this funding as vital for the company’s ambitious goals in a large and growing market.
The Origin Story
Al Zaben’s entry into the debt collection field came after the sale of his previous company, Munch:On, to Careem in 2022. During a reflective period, he identified significant challenges in the area of payment collections from corporate customers, which led him to explore the intricacies of receivables management and unpaid invoices. Through discussions with industry professionals, he discovered that the debt collection sector was largely outdated, often relying on intimidation tactics and rudimentary systems.
With the rapid rise in consumer lending, especially with the emergence of companies like Tabby and Tamara, there was a compelling opportunity to innovate within this space. Understanding that collection processes needed modernization, Al Zaben and his co-founders, Khalid Bin Bader Al Saud and Mohammed Khalili, established ClearGrid to develop software that utilizes AI for streamlined debt collection.
How ClearGrid Works
ClearGrid operates as an intermediary between lenders and borrowers, with a platform that automates the collections process. By integrating with ClearGrid’s system, lenders can easily send borrower accounts for processing. The platform’s AI capabilities assess factors such as the likelihood of repayment, predict customer behavior, and personalize communication across different channels.
Key Features of ClearGrid’s Technology:
- Automation: About 95% of ClearGrid’s operations are automated, employing AI voice agents to manage thousands of calls every day.
- Personalized Communication: The platform adapts to the preferences of borrowers, facilitating human interactions when needed, while also gathering data to improve future outreach.
- Borrower Categorization: ClearGrid classifies borrowers based on their repayment capacities and willingness to pay, allowing for the structuring of manageable repayment plans.
Benefits of AI in Debt Collection
According to ClearGrid, its platform can reduce collection costs by as much as 50%. This innovative approach not only improves recovery rates but also enhances borrower experiences. Key statistics include:
- ClearGrid reportedly resolves debts at rates between 38% to 50%, which is notably faster than traditional collections agencies.
- Borrowers engage with the ClearGrid platform 60% more than they do with conventional agencies.
Since its launch, ClearGrid has successfully managed hundreds of millions in debt portfolios and secured partnerships with ten major fintechs and banks in the UAE. One unnamed bank claimed a 30% increase in recovery rates and a significant reduction in collection costs.
Business Model and Future Growth
ClearGrid operates by charging a fee based on recovered amounts, and its revenues have been growing at a monthly rate of 30% in the UAE, where it has already become profitable. Plans are in place for expansion into Saudi Arabia, alongside ambitious goals to significantly increase the revenue and accounts managed throughout 2024.
Al Zaben foresees ClearGrid as a pioneer in establishing a new credit orchestration infrastructure in the region, driving further innovation in debt resolution practices. Investors backing ClearGrid include notable venture capitals like Beco Capital, Nuwa Capital, and Raed Ventures, as well as prominent angel investors from various tech backgrounds.
