ClearGrid Raises $10M to Revolutionize Debt Collection with AI in MENA

The Evolution of Debt Collection in Emerging Markets

Traditional debt collection methods in developing economies are frequently perceived as antiquated and can incur substantial expenses. This often leads to a deterioration in the confidence borrowers have in lending institutions.

With the rapid expansion of consumer lending and increasing regulatory pressure for equitable procedures, established debt collection agencies are finding it challenging to adapt.

ClearGrid's AI-Powered Approach

ClearGrid is focused on revolutionizing debt recovery processes through the implementation of artificial intelligence (AI).

The Dubai-based startup is launching publicly after securing $10 million in funding, comprised of $3.5 million in pre-seed capital and $6.5 million in seed funding.

ClearGrid’s platform is designed to assist banks, fintech companies, and lenders in maximizing debt recovery rates while avoiding aggressive or harassing tactics towards customers.

Significant Early Investment

Founded in May 2023, the company’s funding represents a substantial vote of confidence.

Co-founder and CEO Mohammad Al Zaben emphasized that this financial backing is a critical asset for a “highly ambitious organization with a significant objective within a large market.”

This investment will allow ClearGrid to accelerate its development and expand its reach within the emerging markets landscape.

Leveraging AI for Modern Debt Collection

Following the sale of his prior venture, Munch:On, to Careem in 2022, Al Zaben transitioned into the debt collection industry. During a period of post-exit reflection, Al Zaben identified a significant hurdle faced by Munch:On – the process of securing payments from business clients.

This observation prompted a deeper investigation into receivables management and the issue of outstanding invoices. Further consideration revealed that the challenges within consumer debt collection were even more substantial.

Al Zaben shared with TechCrunch that debt collection agencies often operated with outdated methods. Some still depended on manual processes, while even the more progressive utilized only rudimentary Customer Relationship Management (CRM) systems. The industry heavily relied on aggressive tactics and, at times, harassment, resulting in a negative experience for debtors.

Consumer lending was experiencing rapid growth concurrently. Companies specializing in "buy now, pay later" (BNPL) services, such as Tabby and Tamara, were processing substantial transaction volumes, and the overall amount of unsecured loans was increasing significantly throughout the Middle East.

Recognizing a market need, Al Zaben, alongside co-founders Khalid Bin Bader Al Saud and Mohammad Al-Khalili, established ClearGrid. Their focus was on developing software and implementing artificial intelligence to optimize debt recovery and facilitate collaboration with current industry participants.

The CEO stated that the convergence of expanding lending practices, stricter regulations, and the transformative power of AI presented a unique opportunity. ClearGrid aims to assist lenders in recovering funds while simultaneously fostering positive borrower relationships.

Al Saud emphasized that this initiative represents an initial phase in constructing the foundational framework for the future of debt resolution.

Automated Debt Collection Systems

ClearGrid functions as an intermediary between lending institutions and individuals with outstanding debts, employing AI to streamline the collections process. Lenders can integrate with ClearGrid through its platform or utilize its API, submitting borrower accounts for automated handling.

The company asserts that its AI models assess factors such as the probability of repayment, anticipate customer actions, and tailor communication strategies across various channels.

As stated by Al Zaben, a substantial 95% of ClearGrid’s operations are fully automated. This includes the use of AI-powered voice agents capable of managing hundreds of thousands of calls on a daily basis. Borrowers who prefer direct human contact can engage in conversations facilitated by the platform, with the resulting insights being integrated into the startup’s extensive modeling systems.

ClearGrid’s system classifies borrowers based on their capacity and willingness to fulfill their financial obligations. Repayment plans are then structured into smaller, more achievable installments, encouraging repayment without resorting to forceful tactics. The company reports a potential reduction in collection expenses of up to 50%.

“Our goal is to develop specialized tools that enhance lenders’ effectiveness while simultaneously providing consumers with a pathway to resolve their debt,” explained Al Zaben.

Growth and Performance

Since its launch in 2024, ClearGrid has overseen debt portfolios totaling hundreds of millions and has secured partnerships with 10 major fintech companies and banks within the UAE. A leading bank reportedly experienced a 30% increase in recovery rates and a halving of collection costs through ClearGrid’s services. Furthermore, a prominent BNPL provider purportedly doubled its recoveries by automating the resolution of debts in their early stages.

Across all applications, Al Zaben indicates that ClearGrid resolves debts at twice the speed of conventional collection agencies, achieving a 38% to 50% improvement in resolution rates. Borrowers also demonstrate 60% greater engagement with the ClearGrid platform compared to traditional agencies.

ClearGrid generates revenue by applying a percentage-based fee to the amounts successfully recovered. The startup’s revenues are currently experiencing a 30% month-over-month growth rate in the UAE, where it has already attained profitability. Expansion into Saudi Arabia is planned for the current year, according to Al Zaben.

With the recent funding secured, Al Zaben stated that ClearGrid intends to increase its revenue and the number of managed accounts tenfold in 2024. Currently, the company manages over 130,000 borrower accounts each month. Plans also include doubling the size of its engineering team in the next fiscal quarter to construct what Al Zaben describes as the “definitive credit orchestration infrastructure” for the region.

Investment and Backing

ClearGrid’s investors include venture capital firms focused on the Middle East and North Africa – Beco Capital, Nuwa Capital, and Raed Ventures. The company also benefits from investment from notable angel investors including Anu Hariharan (formerly of Y Combinator and founder of Avra), Amjad Masad (CEO of Replit), Jason Gardner (founder and former CEO of Marqeta), and Justin Kan (co-founder of Twitch).