Gurgaon-based FREED, a comprehensive debt relief platform for consumers, today announced it has raised $2.8 million (about Rs 21.3 crore) in a pre-Series A funding round led by Inflection Point Ventures, a Gurugam-based angel investment platform.
The round also saw participation from Multiply Ventures, Chandigarh Angels Network, Lead Angels, Hyderabad Angels, The Chennai Angels, and a clutch of HNIs.
Founded in August 2020 by serial entrepreneur Ritesh Srivastava, FREED claims to be India’s first consumer debt relief platform that settles unsecured personal loans & retail credit cards. Since its launch, the startup has enrolled over 6,500 consumers with over Rs 350 crore in retail debt and settled over a thousand accounts with creditors, offering debt reduction to consumers and resolution of bad debt for creditors.
According to the statement, FREED will use the raised funding to bolster the team across verticals, build the tech stack to roll out new and differentiated debt relief products/services to scale up customer acquisition and brand promotion initiatives.
Apart from this, The Gurgaon-based startup is also building a proprietary credit scoring algorithm for near-prime/Alt-A borrowers by leveraging data on borrowers’ behavior during the DSP program. FREED says it is disrupting and organizing the current retail debt settlement market by creating a borrower-centric comprehensive platform that solves end-to-end pain points.
The startup also said its Debt Settlement Program is beneficial for people with high levels of unsecured debt, who are struggling with financial hardship due to a job loss, pay cuts, medical emergencies, etc.
It also offers personalized budgeting, spends analytics, repayment simulations using AI/ML, debt pay-off strategies & credit education to help people avoid the debt trap, it said.
Speaking on the development, Ritesh Srivastava, Founder & CEO of FREED, said: “FREED was founded with a vision to help debt-burdened consumers resolve their debt and regain their financial freedom. The problem needed immediate action and FREED will occupy the space of Friend and Financial Resurrector… helping consumers regain normalcy and a sense of balance in their life. IPV has backed some very successful and admirable startups at a very early stage, and we are excited to partner with them in this journey.
FREED is the only consumer-facing platform that is aiming to bring borrowers seeking debt resolution and lenders on a neutral platform to amicably resolve the debt given the financial hardship of such borrowers, the statement said.
With the growth in retail credit, mounting NPAs, and low recovery rates on late-stage delinquencies, FREED is attempting to solve a $15 billion NPA problem. The current retail unsecured loan book has surpassed $160 billion and is growing at 12% + CAGR. There is a huge opportunity for debt relief in this segment starting from prevention to cure for debt-burdened consumers, it adds.
“Debt can be stressful and create barriers for future loan requirements. However, with FREED, consumers can clear their personal loans, medical emergency loans and other debt which one may find difficult to pay due to sudden changes in their routine like loss of job, pay cuts among others,” said Vinay Bansal, Founder & CEO of Inflection Point Ventures.
“FREED is the only debt relief platform in India that enables a person to clear their debt smoothly and even reduces the payment amount with their domain expertise, thus giving the customer a chance to improve their credit rating and ultimately be debt free. IPV aims to extend their support in helping FREED strengthen their services and marketing plan,” Bansal adds.
So far, Inflection Point Ventures has invested over Rs 385 crore across 118+ deals. The investment firm recently announced the launch of $50 million AIF Fund Physis Capital to invest in Series A and B growth-stage startups.