DebtStream, a digital platform for businesses to collect debt from those who fall into arrears, has raised £1.1m in a funding round led by early-stage venture capital firm Ascension.
US-based fund Fin Venture Capital also participated, along with angel investors Chris Adelsbach, founder of Outrun Ventures, and John McAndrew, former CEO of TransUnion.
The Chester, UK-based startup said it will use the seed funding – shared exclusively with UKTN – to make hires in engineering and client setup.
The startup’s founders Gareth Bailey, Martin O’Donnell and Leo De Freitas, believe that the debt collection industry has not kept pace in the digital age.
The platform, which is available off the shelf or customised to match a company’s brand, lets those who fall into arrears manage their repayments privately and at their own pace.
The founders said that their previous experience working in the debt collection industry showed that those who fall into financial difficulty are “often reluctant” to respond to traditional call centre channels.
“Talking from personal experience, I’ve seen a family member with a relatively small debt, bombarded with letters, phone calls and doorstep visits, causing them to bury their head in the sand and ignore the situation,” said Martin O’Donnell, CPO and co-founder of DebtStream. “Had there been a digital safe space for them to use, in their own time, without this pressure, they would have addressed their arrears and got back on their feet sooner.”
DebtStream said it works with clients to tailor the digital options on the platform to suit specific requirements.
Part of the extra capital will be allocated to setting up a “plug and play” model in which clients can be set up and running in “a matter of days”. It can also be integrated with other services via an API.
Ascension, which invests at the seed stage in UK companies, made the investment via its Fair By Design Fund.
“Due to the lack of innovation in the debt collection sector, borrowers are more disconnected than ever with debt collection agencies and lenders,” said Ascension’s Sam Marchant. “DebtStream aims to improve the collections process by fostering honesty and trust between the borrower and debt collector through personalised repayment plans.
“The Debtstream team is highly driven and focused on improving the visibility of the collections process to benefit both borrowers and debt collectors.”