Startups

This startup wants to make debt collection less shady

Miguel Leman experienced the hardships of finding solid debt collectors first-hand, so he founded a business to tackle the problem.

Miguel Leman, Recoverity cofounder. (Courtesy photo)
Seven months ago, a 33-year-old project manager quit his job in the Virgin Islands because he wanted to work full-time on revolutionizing the debt collection industry. Yes, the debt collection industry. 

Meet Miguel Leman. He’s the cofounder of Recoverity, a startup that aims to tackle what he says is the field’s biggest problem: shady collection agencies. He moved to D.C. because his wife got a job in the area and now he’s building his company here. Out of his home in Adams Morgan, to be specific.
Right, so, debt collection. In recent years, debt collection agencies have gained John Oliver-grade notoriety for unsavory, and in some cases, illegal, practices.
“The most common thing we see is a collector calling about an incorrect balance or a balance already been paid,” Leman, who’s been building the startup for the last three years, told us over the phone. “There’s also the typical stuff you see from calling people at work, using a harassing tone, up to the most notorious things, like threatening them or calling people’s bosses about their employee’s debt.”
That’s where Recoverity comes in.
Recoverity finds reputable, experienced collection agencies and provide comparison information on them to any businesses looking to collect money they’re owed. The company’s revenue model is designed to incentivize the best pairings between businesses and collection agencies. The startup charges the collection agency a ten percent commission on the amount it’s able to collect after the agency takes its own cut, which can be anywhere between 15 to 40 percent.
So Recoverity only makes money if the debt collected for their business customer is substantial, which only happens if they find the best collection agencies.
“A lot of the information you need [to find a good agency] is buried in databases,” he told us. “There’s a tremendous amount of misinformation out there. So most credit managers don’t really have good idea who to pick.”

recoverity

Miguel Leman’s at-home workspace. (Courtesy photo)


Recoverity is run by Leman, whom we met at Technical.ly’s Super Meetup last week, and his Chicago-based CTO and cofounder Jacob (who asked that his last name be withheld for privacy reasons). Leman, who grew up in Denver, got the idea for the business while he was managing credit collectors at Agera Energy in the Virgin Islands.
To date, Recoverity has vetted over 2,000 collection agencies to provide these comparisons for its businesses customers. The review for agencies included simple standards: be licensed, don’t give yourself customer reviews and don’t buy favorable federal reviews.
Only out of five agencies passed muster, Leman said.
Those that did are setup with a public, SEO-friendly profile and added to the Recoverity agency database. The company creates a profile for any business who approaches them asking for help finding agencies to collect their debt. Recoverity then matches that profile with their approved agencies. Customers then receive a comparison of the recommended agencies to choose the best one.
Most of Recoverity’s current customers are private medical practitioners. The company is looking to expand into more hospital collections.
Leman said they are also looking to provide more data, such as recovery rates, in the agency comparisons they give to customers. Recoverity is also developing an app that they hope will open a whole new market of small businesses debts to collection agencies.
While Leman builds Recoverity, he also has another job: he’s a stay-at-home dad to his two-and-a-half-year-old son, Logan. Leman and his cofounder set their own deadlines and pace to make sure Leman has time to be a parent and take time off sometimes, too.
“It’s still stupidly ambitious [to do both],” Leman laughed when describing his work-life balance to me. “But it’s also one of the most rewarding things I could have done.”

Before you go...

Please consider supporting Technical.ly to keep our independent journalism strong. Unlike most business-focused media outlets, we don’t have a paywall. Instead, we count on your personal and organizational support.

Our services Preferred partners The journalism fund
Engagement

Join our growing Slack community

Join 5,000 tech professionals and entrepreneurs in our community Slack today!

Trending

The person charged in the UnitedHealthcare CEO shooting had a ton of tech connections

Northern Virginia defense contractor acquires aerospace startup in $4B deal

From rejection to innovation: How I built a tool to beat AI hiring algorithms at their own game

Where are the country’s most vibrant tech and startup communities?

Technically Media