KredosAI raises $7M, led by BMW’s venture arm, to use AI to help companies collect late payments

KredosAI, a Seattle-area startup that uses AI and behavioral science to help companies chase down late consumer payments, raised $7 million in a new funding round led by BMW i Ventures, the independent venture capital arm of automaker BMW Group.

The company, founded in 2021 by former T-Mobile executives Balaji Sridharan and Dave Thoms, is based in Issaquah, Wash. It focuses on the period after a bill is overdue but before the account gets sent to collections or written off. Its technology is able to tailor the wording, timing and channel of each overdue message based on a customer’s account history.

The premise, Sridharan said, is that most people aren’t being nefarious in their tardiness but are dealing with something more mundane, such as a forgotten due date, a short-term cash crunch, or possibly some kind of frustration with the service. 

“The majority of consumers who go late on payment actually want to pay,” he said. “There’s a very small subset of people that are fraudsters, but most of them want to pay.”

New investors Motley Fool Ventures and Walter Ventures joined existing backers Okapi Venture Capital, StartFast Ventures, SaaS Ventures and Stout Street Capital in the Series A round. Total funding to date for the company is a little over $10 million.

The BMW connection came through an introduction from an existing investor, Sridharan said. Having an automaker’s venture arm behind it matters, he added, as KredosAI moves deeper into auto lending.

Subprime auto-loan delinquencies have climbed to their highest levels since the 1990s. Lenders, Sridharan said, weigh the problem much the way telecoms do — balancing the cost of recovering a payment against the value of keeping the customer. That overlap, along with BMW’s footprint in the car business, made its venture arm a logical fit. 

KredosAI works with large enterprises, including some in the Fortune 50, though it doesn’t name most of them publicly. It got its start in telecom, which speaks to its roots: Sridharan and Thoms met at Bellevue-based T-Mobile. Sridharan spent eight years there, first running corporate strategy and later the carrier’s IoT unit, following an earlier stint at McKinsey. Thoms has spent much of his career in credit and collections at telecom and financial-services firms. 

Watching T-Mobile wrestle with millions of past-due accounts each month, they came to think there was a better way to handle the conversation with a customer who’d fallen behind. 

To decide what to send, the software weighs a customer’s account characteristics (how often they’ve been late before, their average balance, how long they’ve been a customer) while steering clear of off-limits signals like age. It reaches people through text, email and most recently RCS, along with AI voice agents the company began adding over the past year. 

The company says the approach delivers notable improvement: across its customers, it reports cutting write-offs by 11.5% and lifting customer lifetime value by 13.6% compared with conventional collections. It says its platform has handled more than 200 million customer interactions over the past two years, with revenue growing more than sixfold in that span. 

KredosAI is also a partner of FICO — the analytics firm best known for the FICO credit score — and integrates its technology into the FICO Platform, the software banks and other large companies use for credit decisions and collections.

The company competes with a range of collections-software players, including larger, more established Symend, a Calgary-based company that also uses behavioral science to interact with late-paying customers. The field also includes online debt collectors and companies selling older collections software. 

The company has about 25 employees, roughly eight of them in the Seattle area. 

Sridharan said the funding will go toward sales and marketing, further product development around agentic AI and voice agents, and eventually international expansion. He expects to roughly double headcount over the next year, to 50 people or more. 

The additional funding, he said, “gives us a bit of fuel to go to market a little more aggressively than we have in the past.”