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Hey, found your friends. This is your last chance to apply a pitch on the next season of our show. Applications will close november thirteen. So you're raising capital for your start up.

You should apply three minutes is all IT takes pitch that show slash apply and with that, i'm josh mutio and you're listening to the pitch where started founders raise millions and listeners can invest. The pitch for romance is coming up right after this. Support for this episode of the pitch comes from mercury.

I'm so excited that mercury is sponsoring season twelve of the pitch. Mercury is a banking solution built specifically for the needs of start up founders. I've actually been a mercury customer for the last two years, and I love the product, big fan, which is why i'm thrilled to say that later on in this episode were talking to the CEO and founder of mercury, a mod account.

So stay tuned back to the pitch. I just can't want to do. I want to do.

I went to do thing on the count work. So it's great. Grannett borden has a ten data this season has been all about tearing down broken systems.

And he wants to take on one of the biggest systems of them all, that collection this history. Ally, sleezy industry needs a makeover. Gun nett is starting her own dead collection company to do just that by offering hope and redemption instead of guilt, shame. But how do you pitch hope in redemption to a room full of VS when you haven't yet collected a dime?

Ennis.

today.

gen nett is pitching science. Banister, that conwell been taf and elisabetha fun .

your news.

Thank you. Thank you.

Hi, my name is quite important and i'm the founder. And see, over meant mean empowers consumers to rebuild credit while was always doing went det, something I know a bit about from personal experience, I experience something called charged off dead. This is a point in which you you're a credit card accounts closed and sold of third party debt fires.

I started fully repaying my debt, and I realized that doing so was not rebuilding my credit. Twenty seven percent americans and the one hundred largest U. S. Metro currently have severely dilli quent det.

In fact, credit card charge offs almost doubled from twenty twenty two to twenty twenty three, from twenty two billion to forty two billion, who's in this demographic overwhelming genji low income and people of color. They've seen their credit scores dropped as much as two hundred points. They now have deck collectors calling them insistently with payment plans and options they can afford and they need to resolve their debt.

But I found a Better way, and that is reminded, we buy charge of consumer debt, and we offer those consumers the opportunity to build a new credit, as seems count personal finance tools, a community and rewards of a payment. What's novel, by opting into paying seventy five to a hundred percent of their debt, we open a credit trade line so they can start rebuilding their credit from their first payment. They're ult timely working toward a charge card that becomes available to them once they fully satisfy their debt obligation.

How do we make money? We buy debt very cheaply, so we can buy high quality that for two and a hand to a dollar. So that means that I get your debt one thousand dollars.

I've paid twenty five dollars for any amount. Over twenty five dollars is profit to me if you want my creditor building product. That means if to pay seventy five to one hundred percent of a debt.

So my profit margins in thousands of percent we are currently looking to close are one million years around at the end of this month, so that we can spend up to two hundred and fifty thousand dollars on buying, about ten million dollars of debt value, and we anticipate recovering about thirty percent of that. So that would be a ten x return on our spent. So I hope you'll join us on our mission to get millions of americans reminded to a Better finances future and appear for your questions.

Thank you.

So just thought I had this clear. You're going to buy a bunch of debt really cheaply. You're then going reach out these say, hey, I now hold your debt. Please start paying IT off. Once you've paid this off to a certain percentage, we then bring you into a program where we will help you start to build credit for all the good work that you've done so far.

You often immediately, so you choose up france. So we make IT really easy for someone who really does want to start handling obligation. And what we do is we don't offer any percent repayment plans.

We leverage marking, animation, tactics, no call centers to drive people in mind to resolve that their own terms. So people can start with little ten dollars a month. And that's one of the problems.

International debt collection. Usually the call and go back and forth with the collector. And we've completely eliminate that because there's a lot of fear and shame in this industry, and we are really focused .

on hoping redemption.

So firstly.

this is a really important company they building. So congrats, tions you. You're taking a very frightening cycle and you're breaking IT for people and you're giving you the chance to be positive sum.

That's really important. That is serious to congratulations. Would you mind just turn a bit more of your personal story and kind of what LED you to the company in the backside and from the origin?

yeah. So as I mentioned, I A personal experience this myself and is a horrible experience, right? You like you have these insein phone calls, the payment plans that are irrational people saying, well, can you just blow money for your mother or can you just do this is, no, I can't that feeling of hopelessness and being like, no, I really wanted pay you, but I can't do IT at the cats that you need.

And I felt that pressure in spades. And so when I realized I actually had this experience where one of my creators, america, an express, offered me the opportunity to fully pay my dead. And I give you a car like ninety days after the fact and all of the sun, when I got my american express card, my credit scores start to sore. And I was like, this is the missing peace.

yeah. I was issued a credit card when I was eighteen, and I was very irresponsible with IT. And I had to go through this. And I also got put on check systems, which, you know.

no, you couldn't a check account.

no checking account. So identify strongly with this product. And I agree this is a very important thing to work.

Thank you. And in our country, I don't think we do good enough job and people fall behind helping them. We know how to punish people, but we don't know how to provide resiliency, and that's what this product is really about.

The problem is when you're on the rebuild cycle, those products that you are being offered only help perpetuate you to be worse off. And for people who are like smart and like highly educated, and they'll get IT together for the most part and figure IT out. But for everyone else, lower income individuals, they won't figure IT out.

They'll be stuck in that kind of perforator. And when you talk about a lot of people, they are unbanked. Some of them fell out of the credit system. And so that's what we're really is really about helping people not fall out of the system that might otherwise do so without our intervention.

Let's to say, hypothetic ticals, you're buying a thousand dollars a dead for twenty five dollars. Are you buying basically any in all? Det, are you trying to pick and shoes? Are you assessing who these people are? How do you think about that?

Yeah, a couple different things. First, were only buying credit card debt up to five thousand dollars maximum for an account under three years in age. Ideally, were the first outside collector from what they fight with the original creditor.

So prior to purchase, we assess the value of the portfolio. We are working with trans union. They have a portfolio assessment product. And when you buy that, you get fifty to one hundred and fifty pieces of information that consumers. So you have a lot of data.

What part of the process of the business so far have you made a tested? Like have you taken anyone through sort of the beginning to increasing credit? Or like just to be could walk us to that? I mean.

it's hard to do that because you have to have a credit product to build with people in interviews that we've done with potential consumers. Overwhelmingly, the two issues that they've said that theyve encountered with the three issues were like payment plans and types, right, not being affordable to them, not knowing where to start. And then finally, that sense of like someone who cares that's looking out for them because they felt really abandoned by their creditors who were willing to extend credit to them and keep extending created to them at all. They had a problem.

So what is your long term vision? Is your long term vision to be the best debt recovery program on the planet? Or is IT to be something else?

So that is a much of a lot bigger vision, right? We want to perfect the way that we buy dead. And then we also want to offer additional products and services that Better serve our consumer base.

So why we see that collection is our on tray point. We actually see our business growing much bigger. And another side, once we Better stand more about that population than we can really expand our credit box and I create underwriting and really do that in a really responsible way to grow that company. To be response for, for people who are even just starting out because I had a lot of people who have been immigrants that I needed your product, not because I nest up my credit, but because I couldn't get any.

I think I think from a mission perspective, I love what you're doing. I really think that things need to change in the system. I've also gotten those nasty notices.

We will forget a payment here, there and then all of that everybody and their mother's calling you. Uh, I think in fin tech, one of the things that are often very concerned about is the unit economics of IT. I completely agree with you that for deck collection, like if you're paying twenty five dollars for thousand dollars of debt, you can make a lot of money.

You can probably do IT more efficiently than a lot. The existing decollete ors with technology and automation. I think once you get beyond that, then you're starting to enter some of the neo bank space and your margins just drop a whole lot, right?

Like if you have a credit card, you're just making small percentage points. It's an interesting customer acquisition wedge that you've got like all this high margin product to get into that space. But then once you're in that space, you're in that battle for that small margin with everybody else.

And the other thing, the interesting thing about fin tech that I often hear, entrepreneur says we want to expand our skills to increase the lifetime value of our customers. But when you actually look at the data, even like jay so big behemoth, most people don't have a bank anode rate card and a origin. And on the other products of chase, most people have maybe one thing that chase and then other things with other banks, right? So IT is actually very hard and even for the big companies to quote on the consumer on many products.

So it's going to pick a lot of capital. The margins are going to be thin. And I think for us in our small fund, it's probably not the best fit. But I really am reading for you and hope that you knock this at the park. Thank you.

I disagree this a bit here. Uh, i've also gone through these issues with credit card date. My time is a Young founder who had golden handles.

I quit my job and say, hey, I would do the silicon valley thing and lost everything and spent like years of getting like I got really good at ignoring my phone. And so I can imagine if i'm working with the program that help me build my credit, there will be some brand for me. I like you a lot, and I love which your building, because what your building is important. 大家 晚上 了。

Max, hang up after this.

Fox creative.

this is advertiser .

content brought to you by mercury. You already know how much I love mercury, but why take my word for IT? We have a mod, a coed himself, the CEO and founder. To tell us a bit more.

you know, as an entrepreneur, finance is a kind of scary, right? I struggle for a long time raising enough money and making pero and all these things. I always felt that, like logging into the bank was always such a painful thing.

All that time I was like, this GTA be a Better way. None of the other banks had API as take business soa. Getting basic things like that seem weird that you just going to do that. So in two thousand thirty, like, okay, someone's going to do this, i'll just do this if no one else does that.

it's the unique experience about mercury. Each time I log in, it's like, oh, hey, have you tried this feature? And I quite what my my bank is launching new features. Maybe you can just tell me about what are some of the new offerings you guys have launched recently.

Earlier, the sea we launched to bill pay, which is kind of the reverse side of invoice. invoice. You asking someone to pay, you will maze, you received an invoice.

We made IT. So you can like drag that PDF directly to mercury. People think it's gonna be harder than just being for something we've actually made IT, so it's easier. And I also use merry for my personal banking.

I didn't know that was a feature you offer you offer .

personal banking. Yes, we also do post some banking. It's it's a very new thing ah, but it's it's useful to do actually like business and persons banking in the same interface um we should get you .

on yeah that sounds like a dream. I've always had seventeen different bank accounts.

Yeah once you do this, you want any other bank .

yeah starts personal banking. Now you've got the credit card solution as well for tracking expenses and get some AI PDF reading going on there. That's for billing.

Pa, pretty smart. Why would I start up? Look to mercury?

I think we are like a fairly complete solution, phony dis entrepreneur. We are the easiest way to get a bank action online. And after you do IT, it's very seamless. You can run your whole business finances through IT in one .

in one place. And easy, super easy. Mercury is a financial technology company, not a bank. To learn more about mercury latest features and more, head to mercury dot com. Mercury, the art of simplified finances.

I like you a lot, and I love which your building because what your building is important back at one hang up, you have a wage where because of the product, your building, you get all these customers information that throat, you still have to figure out how to engage you. And I know you have a full plan around IT. You don't know what part of that plan is going to work.

You shi, you have to test all that stuff. You're going to get this million dollar close. We're going to speak down to existence by no a the decent portions going to .

go to buying that i'm only up .

to percent is going to buying. That means you ve got one hundred thousand and to figure out how to engage these customers and really probe like half of that because i'm just talking time was like when you get through half of that, you start the field, the crunch. If the numbers aren't kicking in, you start looking around the team, how we drink things down, how do I figure stuff out then negative into a cycle, love. You got to figure out this cause of magnification thing really quickly if you don't, within that amount of money, does IT.

But I have a full marketing sec praise ampt ude hot jar mix panel. We're IT like in IT to win IT. But again, like in basic deck collection, people pay their debt without any marketing automation taxes. I want to remind you that the front end is that the other alternative for this consumers is not responding and .

being referred to a deck collector. That suit just the closed up. I'm really interested. I can't get over that home just yet.

I have a question actually pitch hat off for a second and like you and I strategizing on the thing, yes, together for a second. Let's save for one moment that we just put aside this potential million dollars you raise like it's not going raise. What's the look that just the minimum viable proof point to be like this business works? And how can we get that?

yes. So that what we're doing actually a phase in approach. So we are launching with spending a small amount up to twenty five thousand dollars, and we're only doing that collection, no credit building in August.

We layer in a credit builder line, right, where we open a credit line for each payments to reports the creditors. Then we will launched in october the actual charge card. But the thing is, we need to close this race just to do the first step to get in and by very little bit of debt or in the process of closing our bank partnership. But they want to see to have a baLance sheet at least seven hundred and fifty thousand dollars. So the reason I have to have the money is without IT, I can't get into the market because we're partner with a bank.

These three phases, which are the three phases, requires a bank's participle.

The second phase, the credit buildings, any credit building component IT requires a bank because I can't issue cp.

But so for the first phase to just get a little bit of dead, improve that you can collect and so forth. And on the uneconomically, IT sounds like you can do that independently of a bank, right? OK, where I stand and where we stand as a fund is IT would go a long way for us if you were past that first milestone because that's the furthest you can get on your own to prove that this business will work.

And now you're at the obstacle where you need the money to move on to the next phase, but you've already the risk the business up to this point. And so if we were talking two months for now, I think I could get really behind this, but I would want to see you get to that point for personally. So that's why i'm going to sit out for now.

Has anyone Priced this round yet?

So at the end of this month, we're closing at a five million dollar valuation cap. After this month that is going up, we're less than two hundred thousand dollars away from our goal. So our goal here today, I was to try to close out because then we can close our around and actually get into the market, make things happen. Why what think you I .

mean for fifty k personally, thank you. And then I would like for my friend, long journey ventures to take a look for the rest. That would be great.

And I really, really want you to succeed. This is a problem that's near dear to me. My life was react for about ten years. I had to keep money in literally .

a socks war, so smart.

So I get this, you know, IT was really painful, and IT is filled with stigma. You know, when my friends were out using credit cards, I couldn't use one. I couldn't explain IT couldn't get hotel rooms. Yes, you know, you like that was embarrassing. So i'm rooting for you, and I want to be by your side, and I want to help you with this.

Thank you so much. That some meaningful I think the hardest thing about pitching a lot of VC, as they didn't have these these kinds of issues, like people like I said like that, can you borrow money from your mother who know and so they can understand? And that is really a feeling like o people are dead beats.

They don't pay their dead, don't like seventy billion dollars of big charts of debts repaid every year, right? Our financial system would IT work if those people didn't repay their dead. So going back to kind of the risk that you're concerned about is, like i'm not concerned because people who call on the phone make a profit margin off of dead collection. I know I can at that, right, but I feel like the concern about the acquisition is I don't think as as found IT as you might ask soon just because there are sixty three hundred companies that do that collection that are regulated by the consumer financial protection before because it's such a profitable space, they wouldn't spend their time regulating this industry if there .

wasn't so much profit in IT. So just a piece of advice, year one hundred percent correct, but that's the wrong way to approach investors.

Another hang up from mac after this.

Support for this episode of the pitch comes from mercury. As a start up founder, you always have to be thinking two steps ahead. Even when things are going well, it's your jo B2Constantly be pus hing the env elope, moving the company forward. That's one of the things that makes mercury stand out there are start up to and that means they're intimately aware of the needs of a startup and the pain points they desperately need solved. Here's a lot again.

Actually last week, we launched in voting. The idea is, you know, you work with someone you need to invoice them, instead of having to the manually generated PDF to use some other tool. This is all integrated into mercury. And the cool thing about, as we actually generate a unique action number every invoice, so that when you get paid, we can check IT off and say.

yes, you got paid.

And um so we can reconceive very simply .

to learn about mercury's latest features and more. Head to mercury dot com. Mercury, the art of simplified finances. Mercury is a financial technology company, not a bank banking services provided by choice financial group and evolve bank and trust members F, D, I, C.

So just a piece of advice, your hundred percent correct, but that's the wrong way to approach investors. You have at least three people up here live this, right? So we know there's going to happen.

So yes, we know that if you buy some dead people going to paid off, the question is what's the percentage of people and how many people can get to do that over a long period of time? Because we starting today, you're on the ground floor. Our goal is whatever companies we invest have to get to a billion of evaluation, right? There's a minimum hundred million in revenue.

That's a long journey. And so you're right that you inherently have something where people are already engaged. And so for you, you like the customer requisition is not the most important piece, is all the other stuff, right? But you still have to speak to the customer recognition pieces if IT is show up with the plan like this is how we get our customers.

These the things we do and we already know this works because we know that phone calls get fifteen percent return. We do letters, they get five. We know with our chatbot, we're going to get another two.

And if you cover IT all together, we know the industry standard is x. We think we can get to why through these means, but that's why we're going to do Better. That's so Better answer than just saying this isn't the problem. You're focusing on the wrong .

thing one hundred percent because especially in fin take, a lot of bees have gotten burned by customer acquisition. So in in many ways, you have to address problems that are unrelated to your business that have been created by other vinta companies.

Fair point. I like that.

It's just the way of of framing IT when you tell the story, put IT in a frame of like how every other says found their talks about things for.

And sometimes it's .

Better to just say you don't know things that you're gona go uses money just to prove IT out, which I believe is what you're going to do. And I know that the confidence comes from you are just so well versed in your business and you know what you're talking about. And I would take a bed on someone like you all day long. But let's do risk IT so that we can get everybody else in. Yeah.

we got investment.

Thank you.

I am graduate.

me. Thank you. Yeah, but you guys are gona read. I'm telling you. I mean, no, I mean, this like, this is like for me like this this is like taking care of my mother is alzheimer's s this is taking care myself who by polar, this is my everything this is not like, i'm twenty two years old and i'm doing this.

This is my moonshot and I am hundred percent confidence that we are going to crush IT and be a billion other company and be the third public we traded debt or collector. I have no doubt in my mind if you know me, like when I decide and I want to do something, there is no stopping me. So i'm just telling you guys in the later .

part of the year nego.

that's IT.

But I think you all for your time and your feedback is always very helpful and like thank you saying and because your help will will be able to close out and actually prove to you all driving there.

thanks. Thank .

you .

your time.

And what if the pitch fun would also like to invest if you .

have what they do?

If you can hold fifty k for us?

That amazing.

What do .

you close?

But guys, I.

awesome. This is an action idea really like at this point.

like I will say, i've seen i've seen a light in the day recovery .

in .

remitted space as specially from under represented founders. Now brand, he has a different spin on IT that really like IT.

She's got a big vision.

I love that. yes. yeah. I I need to know that you know how you're going to get your customer s so he has a lot of those around you, but feel like there are things you could have try at this point to start building some .

of once he develops the business vision to be as strong as the mission vision. And those two things .

are conclusion.

You are such A A business systems thinker. So yeah.

but he was he herself incredible, her confidence, like he is going to do everything you can and he will put every once and to that company proudly to a detriment of herself to try .

just the one thing I would watch out .

for because the big cess was worried .

when you started .

talking about what what do you mean by that? Like you're worried .

about health burn out yeah you know just and that's a lot .

of weight to .

Carry erself yeah I find that so interestingly, a lot of founders, her stage wing IT more if he came in and was just like i'm raising this money and SHE LED with like i've already got seven hundred k of yeah whatever and i'm almost there but this is what i'm going to use the money for. I'm going to prove IT out IT here's a lot of things I don't .

know in many ways I think .

that would have been stronger yeah I agree. That's what most people do. Now I found that when people are getting a lot of nose, they also prepare and so shy spending a lot of time to be really, really, really ready. But I guarantee you that her peers are not yeah and so is a little bit of that sort of winning IT. I know that sounds crazy, actually goes a long way and it's also honest, which is just like, hey, there's a lot I don't know, but here's here's what i'm going to use the money for and i'm going to prove all this stuff out.

I don't think it's so much winning IT. I think the way that I think about IT is like when I was the first time founder back in two thousand and eight, you know you come in with all this confidence or like this is the plan and this is going to work and that was sort of the biography, then you go along, it's like, actually, no, that doesn't work. And maybe you'll figure IT out, right? But I will look more like this, like xigi I and that's what I would expect.

You want someone who acknowledge .

yeah who acknowledge that like, hey, these are the things we know. These are the things we don't know, but we're going to figure out as opposed to I know this is going .

to work a hundred see something like this approach when approach in the first time founder who maybe doesn't realize how much might change in the next six months.

I mean, I started to give me even more policy like SHE wasn't readily able to say like I don't know or that could happen. But this is why we think IT won't like this is going to happen. This is going happen like you're coming off is not being closely at this point because you're not listening.

So I think like that's what we host going to happen, but that may not be so that doesn't think what. No, that's going to happen. I know for fact that good and now everything goes one hundred .

percent of plan.

simple mistake, we're selling ciza up the proceed right. And as soon as it's like stake, there's something to measure and you can start to screw ize the business. And if you start to see you with with that, there maybe more stake than there is, then we'll start to scrutinize IT. It's really just sisal right?

And it's okay for me. I just, I just really like .

her as well as pitch one.

Can we take a break?

Are we over time? now?

Been over time. Listen her best to get us out here early.

A fairy pitch with some fairy feedback from our VC. But to give gannett credit, SHE handled IT well. Bennett collected a fifty thousand dollar commitment from sign and fifty thousand from the pitch fund. But as ford told by the VC, not everything goes according to plan.

It's just been of an adventure this summer working on getting into the market. And you know always there so many fits and starts, something that like obstacles that are thrown your way that you have to like step over, like our payment process are dropping us because IT turns out that collection is treated like cannabis and gambling and those kind controversial industry. And so there are a lot of payment processors that would work for us. So I next company, my creating a payment processor election.

Oh my god, that's your pivot. Will gantt finally be able to buy some debt and get those proof points investors are looking for find out on our season? Finally, on december eleven at seven pm, you can register for the virtual watch party at pitched t show.

Splash party will be giving away some free match from our store, including my personal favorite, the valuation cap. No offer to invest in remit is being made to the listening audience on today's. But L, P, S, in the pitch fund do have access. You can learn more and invest in our dev fund at the pitch dot fun, we just crossed four million and management in fund one, and we're open to new investors now through december fifteen. And after that, you'll have to wait for fun two in twenty six next week on the pitch.

we help A I teams to turn and user feedback into action about insight. It's called feedback intelligence.

We charge .

them ninety and of contract.

Did you raise any money for the company? You we're .

doing before .

is a completely new company or this P T.

but still we are using that money for this.

I would like to invest, but not at the valuation you're looking for. You can.

That's next week. Subtribe to the pitch right now and turn on notifications. See, don't miss IT one last time for the people in the back founder.

Applications for season thirteen will close next wednesday, november thirteen. This is your last chance to apply. We're taping january fourteen th through sixteen th in miami, florida.

Submit your application at pitch that show slash apply. This episode was made by me, josh mutio, lisa mutio and a lad ya kim and jackie e. Pap with deal sourcing by Peter lu and john Albert.

Music in this episode is by the museum ker rick mr. Cylinder versa CS memory palace and honors. The pitch is made in partnership with the vox media podcast network.

Thank you once again to mercury for sponsoring this season of the pitch. Look, you know, i've been a huge fan of mercury for a while now, but I haven't really told you why. I mean, the first time I logged into their product, it's simple, it's stream wind.

They understand what matters to you as a started founder, having access to your money, having a clear understanding of your finances and being able to send and receive money. Those the things that matter. And like IT feels like they're actually trying to make make banking Better.

So thank you, mercury, for helping us make these ads fun. And thank you to a mod for coming on the show, giving us a peak behind the curtain. If you want to learn more, head on over to mercury dot com. Mercury, the art of simplified finances.