We all know what bailiffs are, but who would have guessed that there would ever be a fintech equivalent? Enter Ophelos, which has just raised a £5m seed round to ‘revolutionize the UK debt collection industry’. It’s an uncomfortable and often controversial topic, but as inflation squeezes household finances, investors say debt collection is more relevant than ever.
What does Ophelis do?
To be fair to Ophelos, there are no real ushers involved in its product. No one will knock on your door. Instead, it’s a fintech that was born out of its co-founders’ observation that the debt collection industry was antiquated and inflexible.
Ophelos is an entirely web-based platform that uses machine learning and data analytics, combined with humans for customer service, to direct people to plans for paying off the debt they owe. different companies that choose Ophelos as their collection agent. So far, Ophelos says it’s used by three of the UK’s biggest energy retailers and fintech brands, including The low, plender and Butter.
Its machine learning platform will use data points like someone visited a page with a repayment plan and then left it as a sign that that plan might be too expensive for them.
“Our machine learning models determine who to contact on which day for which channel, which messages to send to them, and which offers to suggest to them,” CEO and co-founder Amon Ghaiumy told Sifted.
Ophelos, which is regulated by the FCA, operates under two business models. One is an annual subscription calculated based on the volumes its corporate customers need, and the other is a transaction-based model, through which it operates as a payment processor for repaying people’s debts.
Who invests in Ophelos?
- Albion VC, who led the round
- Form Ventures
- Vast enterprises
- Connect Ventures (existing investors)
- Fly Ventures (existing)
- Matt Robinson (co-founder, GoCardless and Nested)
- James Meekings (co-founder, Funding Circle)
- Jonah and Noah Goodhart (co-founders, Moat)
What does the debt collection market look like?
- “Overall, organizations have a unique approach. It’s very rule-based and static,” Ghaiumy tells Sifted.
- The status quo with incumbent organizations, according to Ghaiumy, is a set of steps that includes sending a letter to people in debt first, then progressing to calls from busy call centers.
- Taking debt collection and turning it into a fintech has already been done in the US, by companies like January and TrueAccord. But so far, the industry has remained intact in Europe.
What’s next for Ophelos?
- Ophelos plans to “aggressively hire” and double its team of 18 by the end of this year, then double its workforce again next year.
- For now, the UK is its target market, but Ghaiumy says the company is “very open” to international expansion.
The taking of sieved
It’s a subject that hurt us a little at first glance, but if Ophelos is able to deliver on its promise to offer more support and understanding to people in dire financial straits, it can only be ‘a good thing. Their challenge will be to convince companies that it is worth the trouble, rather than appealing to the proven judicial officer.
Amy O’Brien is a reporter at Sifted. She tweets from @Amy_EOBrien and writes our fintech newsletter — You can register here.