Debt collection in emerging markets can often feel outdated and costly. As consumer lending surges and regulators push for more fair practices, legacy collection outfits have struggled to maintain their pace.
ClearGrid aims to modernize debt collection and recovery with AI. The Dubai-based startup has emerged from stealth with $10 million in funds ($3.5 million preseeds and $6.5 million seeds), helping banks, fintechs and lenders collect more debt without resorting to customer harassment.
For startups founded in May 2023, backing is important. Co-founder and CEO Mohammed Al Zaben called it an important advantage for “a very ambitious company with a big mission in a very large market.”
Building AI-driven debt collection
Al Zaven came across a debt collection space in 2022 after selling to former startup Munch: Ong, Keam. While spending the holidays following the exit, Alzaben looked back on one of Munch: On's biggest challenges.
So Al Zaven dropped the rabbit hole on his modest management and unpaid bills. After much consideration, Al Zaven realized that consumer collections had brought even greater problems.
“When I spoke to collectors, it was clear that the industry had been stuck in the past. Some agencies still use pen and paper, and the most advanced ones relied on basic CRMS,” Alzaben told TechCrunch. “Debt collection was a people-driven business where collectors relied on horrifying tactics and harassment. Borrowers had a terrible experience, and Saudi Arabia and UAE regulators were beginning to prioritize consumer protection.”
At the same time, consumer lending was booming. Buy now, pay later, unicorns like Tamby and Tamara handle billions of sales, and the total unsecured loans had skyrocketed in the Middle East.
Al Zaben and his co-founders Khalid bin Badar Al Saud and Mohamed Karili felt the opportunity. Despite having no experience in the collection market, they launched ClearGrid, created software and AI to streamline recovery and collaborate with existing vendors in the space.
“At a time when loans are booming, regulations are tightened and AI is restructuring the industry, and we see it as an opportunity to help lenders recover their debts while building trust with borrowers,” the CEO said.
“This is just the first step in building infrastructure for the future of debt resolution,” added Bader Al Saud.
Auto-collection components
ClearGrid is between lenders and borrowers to use AI to automate collection processes. Lenders are integrated through ClearGrid's platform or API, and borrower accounts are sent for processing.
According to ClearGrid, AI models help predict repayment likelihoods, customer behavior, and personalize outreach across communication channels.
According to Al Zaben, 95% of ClearGrid operations are fully automated. This includes AI voice agents that handle hundreds of thousands of calls each day. For borrowers who like human interaction, the platform promotes direct conversations and cultivates insights into many of the startup models.
ClearGrid TeamimageCredit: ClearGrid
ClearGrid's platform classifies borrowers based on their ability and motivation to pay, then repay them into smaller, manageable chunks and fine-tune them towards repayment without force. The company claims the platform can reduce collection costs by 50%.
“We're creating opportunities for consumers to get out of debt while building dedicated tools and finding ways for lenders to make them better with what they do,” says Al Zaben.
Since launching in 2024, ClearGrid says it has managed a portfolio of hundreds of millions of debt and has signed 10 major fintechs and banks in the UAE. Cleargrid claims that the unnamed major banks increased their recovery rates by 30% and reduced collection costs by half, while the leading BNPL providers doubled their recovery by automating early-stage debt resolution.
Al Zaben says ClearGrid resolves debt twice as fast as traditional collection agencies, achieving a resolution rate of 38% to 50%, and borrowers interact with the platform 60% more than those agencies.
ClearGrid earns money by charging a percentage fee for the amount recovered. Startup revenue has grown to a 30% month in the UAE, where ClearGrid is already making profits, and the company is about to enter Saudi Arabia this year, according to Alzaben.
With funding, ClearGrid aims to “10x” revenue and accounts managed in 2024 (involving more than 130,000 borrower accounts each month). The company doubled its engineering team in the next quarter, calling it “the region's definitive credit orchestration infrastructure.”
ClearGrid's investors include VCS Beco Capital, Nuwa Capital, and renowned angel investors, including Raed Ventures and Anu Hariharan (Ex-IC, AVRA Founder), Amjad Masad (Replit CEO), Jason Gardner (Marketa CEO), Justin Kanth (Twitch Co-Founder), and Kiefower in Lin (Twitch Co-Founder).