Jason Saltzman is a serial entrepreneur. He first co-founded SeamlessDocs and then went on to found The Alley, a coworking space based out of New York City. Following Alley’s joint venture partnership with Verizon, Saltzman left to build something new and became fascinated with the debt consolidation and relief space.
That’s how Relief, co-founded by Saltzman, Bryan Okeke and Ram Barrouet, was born. Today, the startup is announcing it has raised $2 million via a convertible note, led by Collaborative Fund, BFV, Necessary Venture, The Fund. Angels also participated in the round, including Justin Kan, Ben Kaplan, Elliot Tabele and David Galanter.
Saltzman’s thesis came out of his observation of the space. Third-party debt collection agencies use lots of automation tools but those same services aren’t extended to the individuals seeking debt relief. Relief is an app that uses machine learning algorithms and collective bargaining to reduce debt balances. In essence, Relief does the math on behalf of users and negotiates directly with creditors to bring down the balance (in half ot more, according to Saltzman), all for free.
Not unlike Justworks, Relief uses the power of its entire user base to negotiate with creditors to bring down balances and lower interest rates. Once the negotiation is complete, Relief sets up a payment plan for users to pay off the rest of their debt.
Offering debt consolidation and loans for folks in financial peril is not new, but the ability to negotiate on behalf of the user is not a broadly available feature on most similar platforms.
To be clear, this is not a platform to help folks save money. Saltzman explained that the Relief app is an alternative to bankruptcy.
To start, Relief will generate revenue by the credit issuers who pay to have settlements handled, with Relief taking the place of a debt collector. The startup can also generate revenue by issuing loans and earning off of the interest. But Saltzman hopes to get enough users to start thinking creatively about how to make other forms of revenue.
“Trust is the biggest challenge,” said Saltzman. “We have to get into consumers’ houses and de-stigmatize this horrible problem. The solution is not there right now. The data shows us that one in three Americans is behind on their credit card bills right now. So we need them to trust us.”
Editor’s note: An earlier version of this article stated that Verizon acquired Alley. It has been updated for accuracy.