Debt collection in emerging markets often feels outdated and can be costly — damaging borrower trust. As consumer lending surges and regulators push for fairer practices, legacy collection outfits are struggling to maintain pace.

ClearGrid aims to help modernize debt collection — and recovery — with AI. The Dubai-based startup, which is emerging from stealth 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 just in May 2023, the backing is significant. Co-founder and CEO Mohammad Al Zaben called it 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 into the debt collection space after selling his previous startup, Munch:On, to Careem in 2022. While taking time off following the exit, Al Zaben says he reflected on one of Munch:On’s biggest challenges: collecting payments from corporate customers.

That led Al Zaben down a rabbit hole into receivables management and unpaid invoices. Upon further reflection, Al Zaben realized consumer collections posed an even bigger problem.

“When we spoke with collectors, it was clear 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 booming. 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 AlKhalili, sensed an opportunity. Despite having no experience in the collections market, they launched ClearGrid, creating software and AI to streamline recovery and collaborate with the 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,” Al Saud added.  

Automated collection components

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

ClearGrid says its AI models score things like repayment likelihood, help 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 preferring human interaction, the platform facilitates direct conversations and feeds the insights into the startup’s many 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 cut 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% improvement in resolution rates, while borrowers interact with the platform 60% more than they do with these agencies. 

ClearGrid makes money 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 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 and prominent angel investors such as Anu Hariharan (ex-YC, Avra founder), Amjad Masad (Replit CEO), Jason Gardner (Marqeta CEO) and Justin Kan (Twitch co-founder).