Akredito

63 million Brazilians may be denied access to basic social and financial services such as getting a job, financing a home, reasonable loans to start a business and others. All this because they have delinquent debts registered in the blacklist at credit agencies. Akredito offers the consolidation and refinancing of all blacklisted debts; thus, clearing the name of our client and allowing for financial inclusion. We have already helped 170 people in Brazil achieve dreams such as finance a house, invest in their business, or simply have ease of mind knowing nothing is owed.  Financial exclusion due to debt is a huge problem in most countries around the world and most developing countries lack solutions. Akredito’s general process of debt consolidation is replicable around the world with adaptations for local peculiarities. Akredito refinances all delinquent debts of defaulters, whose registration at credit bureaus causes financial and social exclusion.

63 million Brazilians have failed to pay an outstanding bill and are blacklisted at credit bureaus with a delinquent debt. Being blacklisted at credit bureaus has severe impact as it makes financing a home, getting a job, starting a business, or having access to any type of credit, next to impossible. Studies link indebtedness to lack of productivity at work, worsened interpersonal relationships, worsened mental health, and even worsened physical health. Not having a credit card also leads to the exclusion of the new digital services.

There are three main causes: (1) poor education, (2) banks too lenient offering unreasonably high credit card limits, and (3) financial crisis leading to high unemployment. Covid-19 will likely increase the problem.

Further, few alternatives exist for the blacklisted to bounce back from the negative cycle. Most financial institutions reject giving loans to the blacklisted, while the few financial institutions that do offer solutions (Crefisa/Simplic), offer loans at unsustainable interest rates of over 900% on an APR basis.

Akredito is an online platform where people in debt find a solution to refinance and consolidate all their debts into a sustainable installment plan. The potential client must create a login and fill out a form.  Our team then conducts a credit analysis based on the client’s profile and information from the credit bureaus. If the client is eligible, Akredito negotiates with all the original creditors to obtain the highest possible discounts (73% average discount obtained by Akredito) for all debts. Akredito then presents a proposal where it pays off all registered debts directly to creditors and the client pays back Akredito in sustainable installments (the installments include a service fee).  The client receives a notification to access the platform to find a proposal. If the client agrees on the proposal, Akredito pays all debts and the client pays Akredito in sustainable installments sent via Whatsapp. 

While onboarding clients Akredito uses our credit analysis algorithm to automate analysis. Akredito uses data science applications such as predictive modeling to improve our credit analysis. We plan to incorporate alternative tools to improve analysis such as open banking, psychometrics, and others. We have automated billing via Whatsapp. 

Our target customer is the portion of the 63 million registered defaulters that pass our credit analysis.  On average, the target persona is a female, 20-40 years old, employed, earning U$300 per month (thus bottom of the pyramid), high school graduate (no college degree), living with a partner, no children, found Akredito through a financial education digital influencer, and is interested in financing a house.

The person that applies to Akredito usually wants to payoff debts in order to achieve a dream, many times its to finance a house. However, the person is unable to qualify for financing due to 4 (on average) old delinquent debts from 2017 totaling $800 (on average). The debts in 2017 were due to unemployment. Mortgage companies look at delinquent debt as a exclusion criteria.  Our solution liquidates the $800 debt, after a haircut usually of 73%, for about $200. Then Akredito offers a sustainable payment plan for our client in up to 18 months.  We constantly engage in feedback conversations with our clients to understand all motivations and needs. Further, Akredito hired several employees with delinquent debts. We look to co-create our solution with clients and relevant stakeholders.

A small business owner’s social security number is inextricably linked to his/her business. To get a loan, finance a purchase, rent a space, or access other financial services, the entrepreneur’s social security number will be consulted in credit bureaus. If delinquent debt is registered, the entrepreneurs request will be rejected. A business is unable to prosper, create jobs or access capital if the entrepreneur has delinquent debts registered in the credit bureaus.

By consolidating and refinancing all delinquent debt, Akredito clears our client’s name from the credit bureau blacklist within 5 working days making him/her eligible for financial services. 

Our solution is innovative because we are the first to offer the consolidation and refinancing for all registered delinquent debts of a person. Akredito is a holistic approach to debt repayment.

The direct competitor is if the client negotiates and pays of all his debts directly to all the institutions that have registered that client in the credit bureau. This proves difficult due to: 1) many institutions require a large amount upfront, 2) some institutions don’t allow payment in installments, 3)  the average person owes 4 different institutions making it hard to manage all negotiations, 4) clients don’t have funds to solve all debts at once, 5) old debts are sold to other companies making it hard for clients to find the right person to talk to, and 6) negotiating debts is uncomfortable and annoying.

Indirect competitors include the negotiation platforms: Quero Quitar, Blu365, Acordo Certo, Meu Acerto. The client faces most of the same issues as if negotiating with the company itself, but they do so digitally. Negotiation platforms allow for digital negotiation of debts but do not consolidate and refinance all debts.

Some indirect competitors offer loans for clients registered in credit bureaus: Crefisa, Simplic, Moneyman. All these institutions charge interest rates over 600% APR, if translated into an interest rate, Akredito’s fee is currently equivalent to 150% on a yearly basis. These companies do not help the client repay their debts; they simply offer a loan which could be used to consolidate.

To conduct our service, we incorporate several technological components that individually are not new but have not been used to solve this problem.

Akredito uses an online platform to receive clients. Our process then involves a credit analysis, this analysis is currently partly automated and will eventually be fully automated. We use data science to enhance the predictive power of our credit analysis. We have integrated our system through API’s with several components such as a legally binding online signature platform (Clicksign). Further, we have automated billing via Whatsapp.

In the future, we are looking into incorporating other functionalities to increase our analytical capabilities such as Open Banking and Pyschometrics. 

The technologies used by Akredito are used throughout the fintech world. The question of whether the technology will work is mostly focused on our credit analysis. We must show that we are able to serve a population that is currently excluded due to its apparent high risk. A solid credit analysis is at the core of our solution. If Akredito can maintain a low default rate, the company will be successful in rolling out its solution and scaling.

Our credit analysis is based on literature, experience, AB testing, and data science. Data science is commonly used to enhance predictive power of credit models.

Our team at Akredito is confident that we can create a solution capable of consolidating and refinancing debt with an acceptable default by conducting efficient credit analysis.  

The immediate output of our service is that people that are currently rejected for financial services will have a chance at the services. They will also benefit from improved social and emotional factors. People in debt tend to suffer from anxiety and depression. 

The longer-term outcomes include more alternatives for recovery of people that have delinquent debt. More companies will join the market opportunity. In addition, Akredito will help create a more humane financial industry. The financial industry is big, smart, rich and powerful; while the client in Brazil is small, poorly educated, poor, and feels powerless. The result can be an abusive relationship of complicated products offered to poorly educated population.  A long term effect is to hopefully contribute to change the financial industry into one that is not exploitative but fair and transparent.

We constantly interview our clients and check back on their credit bureau reports to monitor their credit score. The results we have seen are inspirational. Our clients manage to conquer dreams that previously were unattainable. 

Until today, June 2020, we have helped 170 people clear their delinquent debts from credit agencies. We have received a total of over 7000 applicants but due to our credit analysis and limited funding we havent been able to assume the debts of more clients. Before covid, we were accepting 20 new clients per month. 
In one year, we hope to have helped 700 clients. In one year, we expect to be accepting 120 new clients per month.
In five years we hope to have helped 40,000 clients. In five years, we expect to be accepting 2000 new clients per month.
The market today consists of 63 million people; so even in optimistic scenarios we will still have a lot of work to do and people to help.
We estimate that the average household consists of about 4 people. Therefore, every client we serve has a possitive impact on 4 other people.  For example, by clearing the name of a client, he/she is able to purchase a house for his/her family. Akredito has thus possitively impacted about 680 people. 

Today the impact we have on peoples lives is already rewarding. For example, we partnered with a construction company for the past month. The construction company builds and sells low income housing. However, people that have blacklisted debt and apply for mortgages are rejected. We have been able to help 9 of their clients clear their names and thus be accepted for mortgages. We have information that at least 4 have already purchased their house. 
The purchase of a house is only one of the benefits of refinancing old debt. 
Every person we help is a dream that we enable. Be it housing, the investment in a business or even a job. 
Our main goal is to increase our client base and as a consequence increase our impact. This will be the same in one or five years. Increase clients, thus increase impact. 
On the product side, we have several improvements necessary to scale up. In one year, we plan to finalize the automation of our process and further improve our credit algorithm.  In five years, we plan to incorporate funcionalities that will improve our credit analysis such as open banking and psychometrics. 

The main barriers are:
1 - to sucessfully fundraise and have funds to invest in developing our product and to assume debts
2 - to scale while maintaining a low default
3 - to improve our conversion rate


Regulatory uncertainty is always a concern, but Brazil has been quite progressive with fintechs.
Culturally there was a concern in clients trusting a fintech to handle debts, however we have managed to validate this premise.
We have also validated most of our market concerns. 

1- Fundraising barriers will always exist and the way to mitigate is to create a good product and deliver promissing results. Investors will naturally want to invest in the product. Impact investors have already demonstrated interest in Akredito.

2- We reached our objective of lowering our default rate to 15% in 2020. However, our aim is to reduce even further and more importantly to maintain it low while scaleing (objective is under 10%). We will reach this goal by investing and improving our credit analysis. We are already investing in data science and will continue to increase this investment. Further, we will incorporate additional funcionalities such as open banking and psychometrics in our credit analysis. The work to reduce our default rate will be a continual effort. 

3- The improvement of our conversion rate will also be achieved by investing in data science and in our product. Constant analysis of our KPI's such as 'conversion rate' is required. One way to also improve conversion is to focus our marketing  efforts in niches where our conversion is greater. This will be possible by investing in data analysis and determining where conversion is greater.

Pedro (CEO), Mariana (COO), Nathan (CFO), Vinicius (Developer) work full-time. 4 fulltime.  
Gloria, Matheus, Hugo are interns and work 6 hours per day.
Paulo (CTO), works partime. 4 partime. 
Tiago and Carlos (data science) are consulting partime. 2 consultants.
We have a team of 4 advisors in the areas of  Legal, Marketing, Finance and Accounting that support when necessary. 
Our investor also actively participates in the company's development. 

Pedro, CEO and partner, business graduate with a masters in stakeholder management, has 8 years of experience in business development in the socioenvironmental impact sector. https://www.linkedin.com/in/pedro-boot-1680504b/ Mariana, COO and partner, business graduate, 5 years of experience in business development and excellent team management skills to drive our operations. https://www.linkedin.com/in/mariana-boot-bb750882/ Paulo, CTO, 8 years of experience in programing for several companies. https://www.linkedin.com/in/pvictorpessoa/ Nathan, CFO,  7 years of experience in finance and accounting mainly for a major constructing company. https://www.linkedin.com/in/nathan-moraes-11b236117/ The team is highly motivated to solve this complicated social issue, has proven negotiation skills (average 75% discount) and possesses skills to make in depth statistical and credit analysis. Pedro has dedicated his professional life to identifying and building private solutions to social and environmental problems. The team has witnessed pain within their social circles of people suffering from default and lack of options. Further the company has hired employees who suffer from financial exclusion due to default. The team has 5 fully dedicated people, including the management team. The team has participated in the Seedstars/BBVA fintech competition, Sebrae Impact Acceleration and Nudge Impact Challenge.

Our advisors and angel investors have a combined 60+ years of experience in the financial sector having been country managers of major banks in developing countries. Akredito has also assembled an experienced team of advisors with vast experience in law, marketing, and accounting.

A partnership was established with AP Ponto a mid-sized construction company in Minas Gerais focused on low-income housing. The aim is to help clients interested in purchasing a house clear their names off the bureaus blacklist, which is a necessary criterion for a mortgage.

We also have a partnership with credit bureaus in order to have cheaper access to our clients credit reports. 

Currently our business model is similar to a loan. We pay the outstanding debts upfront with highest possible discount, our client then repays us in monthly installments. The installments include a service cost that is ultimately Akredito’s revenue.

In all cases, the client will benefit from a discount in the original debt amount. A standard client case would be the following. In 2017, Client defaulted on a bank credit card (R$500), on a retail company credit card (R$400), and on a furniture shop (R$100); totaling (R$1000). A few months after default, the client was registered at the credit bureaus. Today, 3 years later, the total debt which was R$1000 now equals R$5000. Credit card default interest rates are over 500% on an apr basis. If the client passes Akredito’s credit analysis, Akredito negotiates the total debt (R$5000) with each creditor. Average discount obtained by Akredito is 75%. For example, the bank credit card accepts to liquidate the debt for R$600, the retail company credit card for R$500, and the furniture shop for R$150. The total debt would be R$1250. Akredito would offer the proposal for the client to pay 12 installments of R$172. If the client accepts, Akredito pays each creditor, totaling R$1250. The client would repay a total of R$2064.

Akredito has a direct distribution channel we deliver our service directly to the client digitally.  Currently, our main marketing channels are digital influencers, partnerships and Google, to a lesser extent our social media and mouth to mouth. 

Initially we will raise funds through equity and debt. We plan to eventually be financially sustainable with our own revenue. However, this is only projected to be reached by year 4. Akredito must reach a certain scale to pay for its costs. Until then at least two rounds of funding will be necessary. 

The 9 month program with access to highly qualified mentors, founders and experts is priceless and can be a difference maker in terms of developing a solution and the right mindset. Access to this network will greatly help us overcome our greatest obstacles.  

Solve has a network of highly qualified partner organizations that can also help us overcome our challenges. Particulary in respect to our data analysis, which is at the core of our success, the Solve partners have extensive experience in data science and can help shine a light in the right direction. 

The Solve Challenge also brings great visibility to the problem and to our solution. We would leverage this visibility to gather further resources. 

As mentioned previously, our main obstacles are operational. We must find an efficient way to scale. The experience and knowledge of the partners, mentors, and experts in the challenge will help point us in the right direction in terms of developing the best possible solution. 

Many of the partner companies are also involved in state of the art data science and can shed light into possible paths towards building our solution. 

The MIT Statistics and Data Science center would be amazing to help us develop the best predictive models and optimize our process. 
Destacame, a Solve Member from Mexico is a solution that has plenty of synergy with Akredito.
IDB Group is a reference in development finance and would be an honour to have advice on how to seek funding. 
Capital One, would also be a great partner guide us through creating the best financial product. One that uses the best of current practices while maintaining our core value of transparency, fainess and humanity. 
Microsoft, Nike, Cisco, HP, and the other multinationals can help us create better processes, improve governance, and improve operational efficiency. 

We are a startup with limited resources, we can/need to learn from all successful organizations and people. 

Currently in Brazil, a person may be rejected for a job if he/she is registered at a credit agency with an old delinquent debt. Akredito refinances all delinquent debts registered and in 5 working days our client is eligible to apply for a job. 

A delinquent debt-free credit report is a necessary resource/criteria to land a job in many big companies. 

We are at the initial stages of using data science to solve our problem, but understand that ultimately it is imperative to develop a robust predictive model in order to scale. 
To find a way to rescue a person with delinquent debt and make that person eligible for financial products is a holy grail in credit analysis. The path to this holy grail is through data science. 
Not only are we developing our own predictive model, but also our own credit scoring formula. We are unable to rely on old models since all our clients are ineligible if analyzed by the old credit lens. 

Further, to improve our operational efficiency we must find a way to make our credit analysis flexible to accept many clients, but stingent in accepting the client that wont default on us. This again will be achieved by investing in data analytics. 

We are a solution that is currently trying to help the 63 million people in Brazil that are denied access to basic financial and social services. This problem also exists throughout Latin America. Even developed countries such as the USA are still in the early stages of developing solutions for mass indebtedness. Covid-19 will likely make this problem even greater. We must find solutions to help rescue those that are suffering from debt and all the negative consequences that comes with it.

We need to create a world that has solutions to increase the resiliance of the poor. Akredito is a solution to rescue the financially excluded and a necessary tool for those that will suffer from debt in the future. 

We are for-profit solution because we believe we can create a solution that is financially selfsustainable. We do not want to rely in fundraising in the long term.