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1Mby1M Deal Radar 2011: DisputeSuite, Tampa Bay, Florida

Posted on Monday, May 30th 2011

DisputeSuite develops niche technology and education services to assist credit repair companies in the management and growth of their business. These companies help consumers who notice an error on their report or whom want assistance in rebuilding or repairing their credit. DisputeSuite provides an interactive platform for professionals to communicate with consumers in a secure environment while tracking and managing the consumer’s credit repair process.

Prior to his role in launching Tampa Bay–based DisputeSuite, founder and CEO Michael Citron had been involved in several other enterprises, including automotive services, import/export, real estate development. Citron also founded a wholly-owned mortgage banking institution which serviced a portfolio of greater than $50 million in assets. He is a recognized voice in the financial services industry and has written numerous books, articles, and training manuals. He is regularly featured on television and radio networks including ABC, CBS, NBC, and FOX.

There are 200 million consumers with credit reports in the U.S. and roughly 600 million individual credit files among the three largest credit reporting agencies: Equifax, Transunion, and Experian. Billions of data elements are transferred amongst these three agencies from tens of thousands of companies worldwide. With the increased amount of data, combined with the increased amount of consumers defaulting on their credit obligations, the number of consumers who have noticed a blemish on their credit report is high. Independent studies on the on accuracy of credit reports show that there are a significant amount of credit reports that contain errors. A U.S. PIRG (Public Interest Research Group) study shows that nearly 79% of reports contain errors, whereas other independent reports show numbers in the 10% to 25% range.

Citron believes that regardless of the number of reports that contain errors, the majority of consumers do not understand what truly makes up their credit profile, and what they can do to optimize it. There is value in advice and education, asserts Citron, so the easily measurable penetrable market is nearly 200 million Americans. He says that overseas there are opportunities to developing systems from the ground floor up.

In 2012, the top target will be legal practices. Citron believes that DisputeSuite’s core CRM functionality, along with niche add-ons, will be strong enough to penetrate that market. The company plans to use a similar approach to the way it entered the credit repair market, by offering more than “just software”; that is, credit repair education and training materials. There are between 60,000 and 75,000 law firms in the U.S. alone.

DisputeSuite’s software includes various features, such as customer management tools, a customer portal, affiliate portals, dispute automation tools, a letter editor and library, and administration tools. Per company charges range from $99 to $25,000 for initial setup, with a continuity model of $99 to $2,500 in monthly fees per company. DisputeSuite has approximately 1,000 companies as clients, which translates to 4,000 to 5,ooo users.

Prior to the launch of DisputeSuite there were few notable, cost-effective options for credit repair company owners. There were several smaller desktop apps, but only one known and publicized SaaS solution, CreditCRM. It was the clear market leader but cost close to $15,000, which for many independent CROs, attorneys, and other professionals was too expensive. According to Citron, CreditCRM’s market was focused on selling the business opporutniy to mortgage professionals. DisputeSuite decided to focus on marketing the software to exisiting credit repair business owners – says Citron, “Instead of trying to convince someone to get into the business, I decided it would be easier to convince and prove to exisiting businesses that we could make them more efficient. This proved to be a successful way to enter the market, and get a consistent flow of business.” In 2010, DisputeSuite acquired all of CreditCRM’s user base, and most of its intellectual property.

DisputeSuite has been profitable since 2009, which credits to bootstrapping and the consistent reinvestment of time and assets into the business. Revenue projection for 2011 are $2.5 million to $3.5 million, and the company is confident that it will exceed this goal. Although Citron is a firm believer in bootstrapping and has used it to build DisputeSuite, he says that “I’m considering raising some money in the next six months. The ideal investor is one that can bring cash, as well as business scalability experience. […] Shortly after the launch in 2008, I was inundated with VC offers, and inquiries, I was naïve in the space, and didn’t understand how it truly worked. I spent a lot of time and got my hopes up, only to find out that most of the inquiring parties were tire-kickers without any true intentions, and were looking for companies with revenues that we just didn’t have then.”

Looking ahead, DisputeSuite plans to grow through acquisition. Citron says there are some key businesses that can be acquired that will support his company’s exisiting user base or will allow DisputeSuite to expand this base.

There are no plans for an exit. Says Citron, “I believe this business can be a source of long-term sustainable cash flow. With the right management team in place, we will grow this business to be the obvious choice in the markets that we operate.”

Recommended Readings
The 1M1M Deal Radar 2010: LendingClub, Redwood City, California
Deal Radar 2010: Centrro, Oakland, California

This segment is a part in the series : 1Mby1M Deal Radar 2011

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