Debt collection in emerging markets is often antiquated and costly, which can erode borrower trust. As consumer lending experiences rapid growth and regulators advocate for fairer practices, traditional collection agencies are struggling to keep pace.

ClearGrid seeks to modernize debt collection and recovery by leveraging artificial intelligence. The Dubai-based startup, which has emerged from stealth mode with $10 million in funding ($3.5 million pre-seed and $6.5 million seed), helps banks, fintechs, and lenders recover more debt without resorting to customer harassment.

For a startup founded in May 2023, this level of backing is substantial. Co-founder and CEO Mohammed Al Zaben described it as a crucial advantage for a “very ambitious company with a big mission in a very big market.”

Building AI-driven debt collection

Al Zaben stumbled upon the debt collection space after selling his previous startup, Munch:On, to Careem in 2022. During his time off following the exit, Al Zaben reflected on one of Munch:On’s biggest challenges: collecting payments from corporate customers.

This led Al Zaben to explore receivables management and unpaid invoices. Upon further reflection, Al Zaben realized that consumer collections posed an even more significant problem.

“When we spoke with collectors, it was clear that the industry was stuck in the past — some agencies still used pen and paper, and the most advanced relied on basic CRMs,” Al Zaben told TechCrunch. “Debt collection was a people-driven business where collectors relied on scare tactics and harassment. Borrowers had a terrible experience, and Saudi and UAE regulators were beginning to prioritize consumer protection.”

Simultaneously, consumer lending was experiencing rapid growth. Buy now, pay later (BNPL) unicorns like Tabby and Tamara were handling billions in sales, and unsecured lending totals were skyrocketing in the Middle East.

Al Zaben and his co-founders, Khalid Bin Bader Al Saud and Mohammed Khalili, sensed an opportunity. Despite having no experience in the collections market, they launched ClearGrid, creating software and AI to streamline recovery and collaborate with existing vendors in the space.

“At a time when lending is booming, regulations are tightening, and AI is reshaping industries, we see this as an opportunity to help lenders recover debt while building trust with borrowers,” the CEO said.

“This is just the first step in building the infrastructure for the future of debt resolution,” Bader Al Saud added.

Automated collection components

ClearGrid sits between lenders and borrowers, utilizing AI to automate the collections process. Lenders integrate via ClearGrid’s platform or API, sending borrower accounts for processing.

ClearGrid’s AI models score factors such as repayment likelihood, predict customer behavior, and personalize outreach across communication channels.

According to Al Zaben, 95% of ClearGrid’s operations are fully automated, including AI voice agents that handle hundreds of thousands of calls daily. For borrowers who prefer human interaction, the platform facilitates direct conversations and feeds the insights into the startup’s models.

ClearGrid’s platform categorizes borrowers based on their ability and willingness to pay, then structures repayments into smaller, manageable chunks, nudging them toward repayment without coercion. The company claims its platform can reduce collection costs by 50%.

“We’re building purpose-built tools and finding ways to make lenders better at what they do while also creating an opportunity for consumers to get out of debt,” said Al Zaben.

Since launching in 2024, ClearGrid says it has managed hundreds of millions in debt portfolios and signed ten of the major fintechs and banks in the UAE. An unnamed major bank increased recovery rates by 30% and cut collection costs in half, ClearGrid claims, while a leading BNPL provider doubled recoveries by automating early-stage debt resolution.

Across the board, Al Zaben says ClearGrid resolves debts twice as fast as traditional collection agencies, achieving between 38% to 50% resolution rates, while borrowers interact with the platform 60% more than they do with these agencies.

ClearGrid generates revenue by charging a percentage fee on recovered amounts. The startup’s revenues are growing 30% month-on-month in the UAE, where ClearGrid is already profitable, and the company is looking to enter Saudi Arabia this year, per Al Zaben.

Al Zaben said that with the funding raised, ClearGrid aims to “10x” revenue and accounts managed in 2024 (it engages with over 130,000 borrower accounts monthly). The company also plans to double its engineering team in the next fiscal quarter to build what Al Zaben calls the “definitive credit orchestration infrastructure for the region.”

ClearGrid’s investors include Middle East and North Africa-focused VCs Beco Capital, Nuwa Capital, and Raed Ventures, as well as prominent angel investors such as Anu Hariharan (ex-YC, Avra founder), Amjad Masad (Replit CEO), Jason Gardner (Marqeta CEO), Justin Kan (Twitch co-founder), and Kenneth Lin (ex-CEO at Credit Karma).