Akredito

70 million Brazilians have failed to pay an outstanding bill and are blacklisted t 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 (75% 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 use open banking and other api to automate our process. We have automated billing via Whatsapp. 

Our target customer is the portion of the 70 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.

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, CPO 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/ 
Luis, CFO and partner, business graduate, 15 years of experience in finance and credit. https://www.linkedin.com/in/luishatamoto/
Daniel, CTO, 8 years of experience in programing for several companies. https://www.linkedin.com/in/danielbfr3// Vinicius, COO,  10 years of experience in collection mainly for several major companies. https://www.linkedin.com/in/vi...

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 10 fully dedicated people, including the management team.

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.

We have served over 500 clients. Currently, we close around 30 new clients per month. Clients stay with us for on average 12 months (average repayment plan). We have about 200 active clients in our portfolio.

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 with great insights. 

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

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.

This is such an important solution that the government is attempting at creating a state debt consolidation solution. We are trying to be part of this government solution. 

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. 

1 year impact: Help 300 people in one year achieve financial inclusion while creating partnerships that contribute to creating a scalable solution

5 year impact: Help 2000 people in one year achieve financial inclusion while being a completely automated, sustainable and everlasting solution for the bottom of the pyramid. 

We measue several indicators that help us make sure our product is having the desired impact and is on its way to becoming sustainable.

In terms of impact, the most important is number of clients, since it measures directly the number of people that we have pulled out of indebtedness. 

Indicators include:
- Number of clients per month (30)
- Average debt assumed per client (R$1500)
- Average discount on debts per client (75%)
- Demographics such as average wage of our clients (R$2200)
- Default rate per vintage
- Financial indicators in order to measure long term sustainability

The immediate result (outputs) of our service is that people that are currently rejected for financial services will have a chance at hiring these 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. 10 months after our service, we see an average of 4267% increase in our clients credit score. Through interviews we confirm that oOur clients manage to conquer dreams that previously were unattainable, such as buying getting mortgages and taking out a loan to open a business. 

We also monitor our clients over time and data indicates that over 75% of our clients don’t have new delinquent debts with other institutions two years after our service. 

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 automated credit analysis. We use a proprietary credit algorithm that is constantly improving in order to analyze our clients potential, we are developing a 3rd version based on neural networks. We have integrated our system through API’s with several components such as a legally binding online signature platform (Clicksign) and credit bureaus. Further, we have automated billing via Whatsapp and have incorporated Open Banking for income confirmation. 

The leaders in our team are of different background, gender, race, and sexual orientation. 

We firmly believe that a winnimg team is inextricably linked to having diverse group of leaders. Especially in an impact company. 

Having diverse leaders will bring forward different ideas, that complement each other, foster creativity and push us towards success.

Most the people working at our operations team come from humble backgrounds and had families which faced financial difficulties. We have even hired a client. We believe this is valuable in order to be as close as possible to our client. 

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 in 2 years. Akredito must reach a certain scale to pay for its costs. Until then we will require a round of equity and debt funding. 

In the medium run, we will be sustainable, we must increase our clients per month by 7 times in order for us to reach breakeven. This increase is reasonable judging by the size of the market. Today we are growing steadily and should achive this in 2 years or less depending on additional funding.

We have already raised a few angel rounds and recieved some grants (Village capital and Artemisia). We will need one or two more rounds of equity and/or debt in order to reach breakeven.

With the additional capital we will further invest in automation and as a consequence increase our production capability. We have consistently invested in automation and have seen our productivity increase. New investment will serve the same purpose.