San Francisco based loan servicing platform has raised $17m in venture financing Index Ventures, Ribbit Capital, Founders Fund, Nyca Partners and CFSI JPMorgan Chase.
Scratch services student and personal loans, though it plans to expand to mortgages and other types of debt in the future. Borrowers do not sign up for the service directly but instead receive an email from Scratch inviting them to participate. Elamawy, who used to be a product manager at Pinterest, says the idea for Scratch came in part from talking to an Uber driver who felt overwhelmed from keeping track of her debt payments. He believes the current model of loan servicing—in which companies charge lenders to collect and distribute payments— can create perverse incentives. Elamawy points out that established loan servicers (who include some of the same people who brought us the 2009 mortgage crisis) typically charge extra fees to lenders when a borrower falls behind, meaning they have little reason to help the borrower pay on time.