Squeezed by the recessionary COVID-19-era economy and the rising prices of everyday goods, some consumers are increasingly turning to lines of credit to make ends meet. According to a September 2021 survey from Bankrate.com, 42% of U.S. adults with credit card debt increased their balances since the pandemic began in March 2020. A more recent report from the Federal Reserve Bank of New York estimates that total household debt in Q3 2022 reached $16.51 trillion, $2.36 trillion higher than at the end of 2019.
The New York Fed's study also showed that the share of current debt becoming delinquent climbed for nearly all debt types, from mortgages to auto loans. But even before the pandemic and crippling inflation struck, the U.S. had a delinquent debt problem. A 2016 whitepaper from the Association of Credit and Collection Professionals International found that debt rose from $150 billion to over $600 billion in the previous five years. During the same time frame, collection agencies -- which take between 20% to 50% of money recovered -- had an annual success rate of 7%.
To solve it -- an ambitious goal, to be sure -- Hanif Joshaghani and Tiffany Kaminsky co-founded Symend, a company that employs AI and machine learning to automate processes around debt resolution for telcos, banks and utilities. Symend today announced that it raised $42 million in a growth capital round led by Inovia Capital with participation from Impression Ventures, Mistral Venture Partners, BDC’s Growth Venture Co-Investment Fund, BDC Capital’s Women in Technology Fund, Plaza Ventures and EDC. While substantially smaller than Symend's once-extended Series B round ($95 million), Joshaghani, Symend's CEO, noted that it's "all equity" and brings the company's total capital raised to date to $140 million.
"We have maintained and continue to maintain a very conservative balance sheet profile," Joshaghani told TechCrunch in an email interview. "This latest injection of growth capital allows us to meet the growing demand for our behavioral engagement technology around the world. While this is not an optimal time for many businesses to turn to funding, for Symend, this was an ideal time as our product demand rises and the realities of the market create a deepening white space for us to capture."
Joshaghani hails from the financial industry, having worked as a corporate finance manager and investment banking associate. Kaminsky's background is marketing -- prior to co-founding Symend, she was the head of sales and marketing strategy at Frog3D, a CNC fabrication business.
Examples of messages customers might see from brands working with Symend. Image Credits: Symend
Both Joshaghani and Kaminsky personally experienced the negative impact of debt, they say. Joshaghani grew up in a household frequently targeted by calls from debt collectors, and Kaminksi ran into trouble with collections with her first credit card as a young adult.
"To this day, I remember the anxiety I felt when receiving calls from collections and knew there had to be a better way -- both for customers and businesses," Joshaghani said. "We founded Symend to help consumers like us and as we’ve grown over the past six years, that mission has remained the same -- our vision is to transform the science of engagement on a global scale."
Symend identifies when customers are having trouble paying bills and provides analytics and tools aimed at helping companies develop debt remediation programs. Via the platform's workflows, businesses can engage with nearly delinquent customers at points likeliest to drive turnaround. For example, they can configure Symend to create payment plans and limited-time payment discounts for certain segments of customers, or they can have the platform connect at-risk customers with financial planning tools, resources and credit rehabilitation programs.
As Joshaghani explained to me, Symend works with a company's existing systems to "optimize engagement" with customers falling behind on bills due to illness, job loss, family trouble and other foreseen and unforeseen circumstances. The platform allows a business to send "hyper-personalized" messages via a customer's preferred channels (e.g. text and email) while providing that business access to playbooks for various debt collection scenarios (e.g. a delinquent credit card).
"Our clients continue to use general-purpose engagement platforms to manage their broad-based customer communications but deploy Symend specifically to solve complex challenges around their past-due customer base," Joshaghani said. "Our ability to productize behavioral science is one of three key innovation areas of our technology, which uses AI, machine learning and data science to develop proven behavioral engagement playbooks to deliver impact out-of-the-box for companies in various industries."
Symend is rather vague about the functionality and technical underpinnings of its platform -- its website prefers jargony buzzwords to plain-English descriptions. But that hasn't scared away customers, it'd seem; Joshaghani claims that Symend is currently serving financial institutions, alternative lenders, utility companies and the majority of telecom providers in North America, including Telus.
No doubt, the rise in buy now, pay later (BNPL) services -- which let users split up purchases into equal installments over a fixed short-term period -- is driving new business to Symend. A recent U.S. Consumer Financial Protection Bureau report found that delinquencies on BNPL services are rising sharply as vendors approve more customers for loans.
"As with many businesses right now, the current market conditions and economic uncertainty has led to us seeing clients with tighter budgets and streamlined decision-making," Joshaghani added. "However, this latest funding highlights the market need, growing consumer demands for an empathetic, personalized approach as consumers face financial stress, and investor confidence in the company’s proven track record with some of the largest financial institutions and telecommunications providers during a time where every dollar and customer has become more important than ever."