In November 2024, MUFG Innovation Partners (MUIP) made an investment in Lecto, a fintech company that provides an end-to-end platform supporting debt management and recovery. The company has achieved rapid growth since its founding 2021. It surpassed a cumulative managed debt amount of JPY 47 billion yen in just three years.
The Lecto Platform
Lecto emerged from a long-standing awareness of challenges in the financial industry. Collection and recovery operations in the financial sector have remained largely unchanged for years, relying heavily on manual labor and paper-based workflows. Lecto CEO Hiroshi Koyama founded the company to address the need for a fundamental digital transformation in the financial sector, which had undergone significant changes in recent years.
“Due to financial deregulation and nationwide efforts to promote cashless policies, there has been a rapid shift toward the diversification and fragmentation of financial receivables in the past 10 years. As a result, financial companies now need to manage and recover millions of small-ticket receivables each month. However, a system capable of handling such demands did not exist in the market,” Koyama shared.
With a 15-year experience in receivables management at a card company, Koyama had confidence in his ability to create and deliver an unprecedented service to the market.
The company’s Lecto Platform stands out for its comprehensive functionality tailored to receivables management, collection, and recovery. It integrates customer data held by a client company to centralize and automate the entire process from collecting debtor data, contacting debtors, to confirming payments.
“We don’t just digitalize collection methods; we accumulate data and customize the most optimal collection approaches. For instance, if most users work during the day, we can tailor notifications, such as SMS or IVR (Interactive Voice Response), to contact them in the evening when they are home,” Koyama explained.
Currently, the platform supports four communication methods: email, phone (IVR), SMS, and physical mail. Client companies can use the accumulated data to segment users based on attributes or behaviors and customize the notification method for each group. Clients highly value these automation features and customization of collection methods.
Rapid growth and investment from MUIP
Lecto has delivered steady growth since its founding in 2021. The company entered its fifth fiscal year in November 2023 and recorded a cumulative managed debt amount of JPY 47 billion yen as of October 31, 2024. Lecto’s platform has been adopted in various industries beyond the financial sector, including rental and subscription services, utilities and taxes, real estate rental fees, and telecommunications.
On the decision to receive investment from MUIP, Koyama explained, “MUFG is a leader among megabanks. From the perspective of a company that has its own business domain, we were eager to have them as part of our network. We had built a strong relationship with their representatives over a year ago. Even before receiving their investment, they were incredibly supportive, introducing us to influential companies within the MUFG Group and more. When the lead investor for this funding round was finalized, we immediately reached out to MUIP, and thankfully, discussions progressed smoothly and quickly from there.”
Future outlook and exit strategy
Lecto believes it has entered the growth stage. As part of its growth strategy, the company aims to achieve an annual recurring revenue (ARR) exceeding JPY 10 billion within the next 4 to 5 years. Beyond that, it envisions a major exit. Koyama said confidently, “As a startup that has the support of our stakeholders, we are committed to ensuring that we provide significant returns to our investors.”
“Lecto’s domain may appear niche at a first glance, but it addresses challenges common across a wide range of industries. As payment systems have diversified, such as with QR code payments, scenarios requiring receivables management have increased. Debt and collections are often associated with the financial sector, but they also exist in areas closely tied to daily life, such as utility bills, internet service fees, and subscription services for renting household appliances or clothing,” Koyama explained.
Organizational development and recruitment
Lecto aims to build a self-reliant organization where every team member is empowered to independently think, research, consult, and make decisions on how to solve development challenges and achieve business goals. The company fosters an environment of open and flat communication, regardless of age or position, creating relationships where team members can fully trust and rely on one another.
To support future business expansion, Lecto is actively hiring across various roles, including sales, customer success, and engineering. The company welcomes individuals who finds its vision and values resonate with them and are eager to take on challenges together with other members of the company.
Through its partnership with Lecto, MUIP aims to drive the digital transformation of receivables management and collection operations and contribute to the modernization of financial infrastructure.
