The majority of individuals have a poor perception of debt collecting. With a new $10 million investment, a business called January hopes to alter that. Most debt collectors, according to founder Jake Cahan, are classified as “predatory firms abusing vulnerable consumers.” An estimated 70 million people in the United States have debts that are being collected. According to Cahan, at least one-fourth of those people are intimidated by collectors in some way, whether it’s through threats of arrest, wage garnishment, or general harassment.
January, originally known as Debtsy, was created in January 2016 on the assumption that lenders and creditors, in general, are growing increasingly worried that engaging traditional debt collectors could jeopardize their reputations. They also put themselves in danger of regulatory sanctions, as Cahan points out. “What I noticed is that on one side of the table, you have debt settlement businesses who are highly unfriendly to creditors, and on the other side of the table, you have collection agencies that are quite adversarial to customers,” he told TechCrunch.
“So I set out to figure out, ‘How can we fix one of the most problematic and archaic aspects of consumer finance?’ As a result, I decided to create a business in this field.” January has created partnerships with creditors to assist them in providing “streamlined” debt repayment options to struggling customers. “Creditors aren’t putting their debtors in a position to be harassed on purpose. “At the end of the day, they’re seeking to maximize the net present value of their overdue or written-off loans,” Cahan explained.
They can enhance how they gather internally to optimize that value, he noted. Their other options are to hire third-party collection agencies or sell their accounts to debt purchasers, who subsequently place the accounts with collection agencies and attorneys. January’s ultimate goal, according to Cahan, is to “be the singular platform that covers all of those collection and recovery demands.”
“We began off by tackling the very, really hard challenge of how do you gather at scale in a highly compliant or extremely compassionate but yet really successful manner,” he added. “From there, we were able to solve some of the industry’s broader concerns.” “We need to stop treating people like criminals and start making the system work because debt will never go away.”
Simply put, January aspires to be a tech-enabled collections firm that collects debt on behalf of creditors in a courteous manner. Every dollar it collects is subject to a contingency fee. The strategy appears to be working. The firm tripled its income in 2021 and more than doubled its personnel, which is presently at 37, with the goal of reaching 70 by the end of the year.
In addition to recruiting, January intends to utilize its additional funds to expand its product portfolio. “In order to function, every institution requires strong collecting mechanisms,” Cahan says. “Some of the largest logos in the credit union, debt purchasing, and fintech sectors,” he added, citing Baxter Credit Union, a multibillion-dollar credit union; Octane, a fintech lender; Alliant, a credit union with $14 billion in assets, and RBFCU, another $14 billion credit union.
January claims to be the only company that “guarantees” compliance and success in its approach to incentive alignment and software. According to Jesse Beyroutey, general partner at IA Ventures, it allows lenders to examine data as well as “a full record of every single customer interaction, across every channel, starting from the time that a loan went unpaid.” January was backed by the investor because, in his opinion, it “addressed the underlying cause of every difficulty in debt collection — trust.” “Before January, debtors were one of the most tormented segments of the consumer credit industry. He told TechCrunch that the process of repaying money was “terribly broken.”
“In January, we reversed the script, reaching out to individuals through trusted channels and being proactive in our communication with both consumers and lenders… Its consumer interactions are based on respect for the individual who is responsible for the debt.” The company’s latest financing was led by Brewer Lane Ventures, bringing the total raised in January to $16 million. Existing backers IA Ventures and Third Prime Capital joined the round, as well as new investors Tribe Capital and Reciprocal Ventures. Angel investors included the former CEO of Credit Suisse as well as the creators of Braze, Bread, GLG, and TrialSpark.