The debt collection industry was estimated to be worth over $13.4 billion in 2021 with over 7,000 collection agencies. With such fragmentation in the industry, collector practices 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 consumer and lender is essential and has implications beyond the relationship between the two. For example, the ability of a lender to recover its loans has a direct impact on the rates it sets for all of its customers. January, formerly known as Debt, is a technology-based debt collection agency. The company focuses on all past due and written off debts. January has positioned itself to offer a data-driven approach to creditors to help them determine the best course of action to manage their debt portfolios – whether relying on internal collections, under -dealing with their party agencies, or even selling the debt, manage the process of each action for the sake of transparency and compliance. When working with consumers, the company takes a compassionate approach to debt collection versus aggressive predatory tactics by establishing realistic and responsive payment plans. This approach has led the company to be 120 times more efficient than traditional collection agencies while serving as the primary collection source for 90% of its clients.
AlleyWatch caught up with the CEO and Founder of January Jake Cahan to learn more about the company, the company’s strategic plans, the latest round of funding and much more…
Who were your investors and how much did you raise?
We raised a Series A of $10 million. Directed by Brewer Lane Ventures, their Series A round included participation from existing investors, such as AI Ventures and Third main capital, and new investors, such as Tribal capital and Reciprocal businesses. We also raised angels, including the former CEO of Credit Suisse and the founders of Braze, Bread, GLG and TrialSpark. In total, this brings the total capital raised in January to almost $16 million.
Tell us about the product or service offered by January.
January improves the lives of borrowers by helping them get out of debt, while helping creditors improve their collections, preserve relationships with their borrowers and ensure compliance. The larger goal of January is to facilitate the settlement of all outstanding and written off debts. January’s first product offering is a technology-enabled collection agency service that enables creditors to collect more while reducing reputational, compliance and operational risk, while providing borrowers with more compassionate ways to get back on track.
How is January different?
Due to outdated processes and bad actors, traditional debt collection is plagued with harassment and fraud. Our products solve this problem by helping financial institutions modernize collections, giving borrowers easier and more compassionate ways to get back on track. Ultimately, we will streamline creditor decisions about which collection channel to use (e.g. collection with their in-house collection team or outsourcing collection to third-party agencies or selling debt to debt buyers ) and manage activities within each channel. This will lead to higher satisfaction, compliance and performance for borrowers. We started by offering a technology-based collection agency service and will eventually create a bundle. Today, we differentiate ourselves with our real-time transparency, codified compliance and data-driven approach.
Which January target market and how big is it?
The debt collection industry generates $13 billion a year.
What is your business model?
If you ask about our rates, we charge a conditional fee.
What are your post-COVID office plans??
We are remote for mid and senior level positions. That said, we are based in New York and have an office in San Francisco.
How was the funding process?
What are the biggest challenges you have faced when raising funds?
A simple story means a lot. Even after enjoying this, we had to rework and simplify our narrative.
What factors about your business made your investors sign the check?
A combination of the market, traction with significant financial institution customers, creating value for borrowers and our financial institution customers, and our team.
What milestones do you expect to achieve over the next six months?
We will partner with more major customers, more than double our headcount, expand our management team, create a new product line, and create a much bigger brand in banking.
What advice can you give to New York businesses that don’t have a fresh injection of capital into the bank?
Simplify your story, then simplify it some more.
What’s your favorite outdoor restaurant in New York?