The debt collection industry was estimated to be in excess of $13.4B in 2021 with over 7,000 collection agencies. With such fragmentation in the industry, practices by collectors vary widely and the industry generates more fraud complaints to the FTC than any other industry. When dealing with such a sensitive area, managing the needs of both the consumer and lender is critical and has implications beyond the relationship between the two. For example, a lender’s ability to recoup loans directly impacts the rates its sets for all customers. January, formerly known as Debtsy, is a tech-enabled debt collection agency. The company focuses on all past due and written-off debt. January has positioned itself to offer a data-driven approach to creditors to help them determine the best course of action to handle their debt portfolios – whether it is to rely on internal collections, outsource to their party agencies, or even sell the debt, handling the process for each action with transparency and compliance in mind. When working with consumers, the company takes a compassionate approach to debt collection versus aggressive predatory tactics by establishing realistic and tailored payment plans. This approach has led the company to be 120x more effective than traditional collection agencies while serving as the leading recovery source for 90% of its clients.
AlleyWatch caught up with January CEO and Founder Jake Cahan to learn more about the business, the company’s strategic plans, latest round of funding, and much, much more…
Who were your investors and how much did you raise?
We raised a $10M Series A. Led by Brewer Lane Ventures, their Series A round included participation from existing investors, such as IA Ventures and Third Prime Capital, and new investors, such as Tribe Capital and Reciprocal Ventures. We also raised from angels, including the former CEO of Credit Suisse and the founders of Braze, Bread, GLG, and TrialSpark. In aggregate, this brings January’s total capital raised to nearly $16M.
Tell us about the product or service that January offers.
January improves borrowers’ lives by helping them get out of debt, while helping creditors improve their collections, preserve relationships with their borrowers, and ensure compliance. January’s larger goal is to facilitate the resolution of all past due and written-off debt. January’s first product offering is a technology-enabled collection agency service that enables creditors to recover more while reducing reputational, compliance, and operational risk, while giving borrowers more compassionate ways to get back on track.
How is January different?
Owing to outdated processes and bad actors, traditional debt collection is rife with harassment and fraud. Our products tackle this by helping financial institutions modernize collections, giving borrowers simpler and more compassionate ways to get back on track. Ultimately, we’ll streamline creditors’ decisions around which recovery channel to use (e.g. collecting with their internal collection team versus outsourcing collections to third-party agencies versus selling debts to debt buyers) and handle the activities within each channel. This will drive superior borrower satisfaction, compliance, and performance. We started off by offering a technology-enabled collection agency service and will ultimately build a bundled offering. Today, we differentiate ourselves with our real-time transparency, codified compliance, and data-driven approach.
What market does January target and how big is it?
The debt collection industry generates $13B a year.
What’s your business model?
If you’re asking about our pricing, we charge a contingency fee.
What are your post-COVID office plans??
We’re remote for mid-level and up positions. That said, we’re headquartered in New York and have an office in San Francisco.
What was the funding process like?
Riveting!
What are the biggest challenges that you faced while raising capital?
A simple story matters a lot. Even after appreciating this, we needed to rework and simplify our narrative.
What factors about your business led your investors to write the check?
A combination of the market, traction with meaningful financial institution clients, value creation for borrowers and our financial institution clients, and our team.
What are the milestones you plan to achieve in the next six months?
We will partner with more large clients, more than double our headcount, expand our leadership team, build out a new product line, and create a much larger brand in the banking space
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Simplify your story, then simplify it some more.
What’s your favorite outdoor dining restaurant in NYC?
Pylos.
