Getting your work wages on a monthly (not weekly nor biweekly) basis has become a more widespread trend as the price of running payrolls has gone up, and organizations\u2019 cashflow has gone down. That 30-day shift may be a boost to employers, but not employees, who may need access to those wages more immediately and find it a challenge to stretch out their income month to month.<\/p>\n
Now, a startup based out of London has raised a large round of funding for service that\u2019s aiming to plug that gap. Wagestream<\/a> \u2014 which works with employers to let employees draw down a percentage of their income in the month for a small, flat fee \u2014 today said that it has closed a Series A round of \u00a340 million ($51 million).<\/p>\n The funding is coming in the form of equity and debt, with Balderton and Northzone leading on the equity side, which makes up \u00a315 million of the raise, and savings bank Shawbrook investing \u00a325 million on the debt side to finance employee draw-downs. Other investors in the round include QED, the Rowntree Foundation, the London Co-investment Fund (LCIF) and Village Global, a social venture firm backed by Bill Gates and Jeff Bezos, among others.<\/p>\n The company is not disclosing its valuation, but this brings the total raised to just under \u00a345 million, and \u201cthe valuation is definitely higher now,\u201d according to CEO and co-founder Peter Briffett.<\/p>\n The list of investors is proving to be a useful one for Wagestream <\/a> as it grows. I asked if Bezos\u2019 company, Amazon, was working with Wagestream. Briffett confirmed it is not a customer currently, \u201cbut we are talking to them.\u201d It does, however, have a number of other customers already signed up, including pest removal service Rentokil PLC, Camden Town Brewery, the Slug Lettuce pub chain and Carluccio\u2019s chain of eateries, along with the NHS and Hackney Council \u2014 covering some 120,000 workers in all.<\/p>\n Amazon is an indicative example of one of the big opportunities for the company, which today is active in the U.K. but aiming to expand across Europe and the rest of the world.<\/p>\n While it is one of the biggest employers in the tech world, where it might typically pay out six-figure salaries in senior management, operational and technical roles, it\u2019s also building out its business by being one of the biggest employers of hourly workers in its warehouses, wider logistics operations and similar areas. It\u2019s employees like these who might be considered the first wave of employees that Wagestream is initially targeting, some of whom may be earning just enough or slightly more than enough to get by (at best), and face being victims of what Briffett referred to as the \u201cpayday poverty cycle.\u201d<\/p>\n Getting paid monthly accounts for some 85% of all paychecks in the U.K. today, and the proportion is similar in Europe and also getting increasingly common in the U.S., Briffett \u2014 who has also worked at Microsoft, LivingSocial (when it was still backed by Amazon, and where he started the U.K. operation and ran it as the CEO for years) and YPlan (acquired by Time Out) \u2014 said in an interview. You might ask: Why don\u2019t the workers just budget better? But it doesn\u2019t always work out that way, especially the longer the gap is between paychecks, and if you, for example, have an unexpected expense to cover.<\/p>\n Because of that ubiquity, and the acuteness of the problem (if you\u2019ve ever earned just about enough, or been a child in a family whose parents did, you may understand the predicament quite well), Wagestream is not the first time we\u2019ve seen a financial services startup emerge to target that demographic.<\/p>\n Some other attempts have been scandalously disastrous, however: recall \u201cPayday Loan\u201d provider Wonga, backed by an illustrious set of investors but ultimately accused of, and hit hard by regulators and the public for, preying on people who were in need of funds with loans that were not transparent enough in their terms and led the borrowers into deep debt.<\/p>\n Wonga itself paid a big price for its practices, and the company is now bankrupt<\/a> (and apparently still unable to replay creditors, as of the last report in March<\/a>).<\/p>\n It was the disaster of Wonga \u2014 and an article in the WSJ<\/a> about alternatives to payday loans \u2014 that Briffett said got him thinking about the possibilities and building Wagestream. (Ironic note: if you use PitchBook as I do, Wonga is listed among Wagestream\u2019s backers<\/a>, which Briffett assures me is an error.)<\/p>\n Wagestream positions itself as a \u201csocial impact\u201d startup for targeting a very real problem that impacts financial inclusion for a proportion of the population, and it says this represents one of the highest rounds ever for a startup in the U.K. aimed at social impact.<\/p>\n \u201cWe fell in love with the strong product-market fit of Wagestream<\/span>. We very rarely hear such universal positive feedback from all who have tried a product,\u201d said Rob Moffat, a partner at Balderton, in a statement. \u201cCompanies used to take an active role in supporting the financial health of their users but this has slowly been eroded, to the extent where employees paid at the end of the month are effectively subsidising their employer for 29 days a month. Wagestream<\/span> starts to restore the right balance.\u201d<\/p>\n Wagestream operates by striking deals with employers to offer its services to its workers, who download an app and link up Wagestream with their salary and banking details. Businesses are able to set limits for what percentage of their wages employees can draw down each month, and how often the service can be used. Typically the limit is around 40% of a monthly wage, Briffett said.<\/p>\n Employees then can get the money instantly by paying a fee of \u00a31.75 per withdrawal. \u201cWe are funding all of the withdrawals up front,\u201d Briffett said. \u201cWe are the first company to marry workforce management and financial data.\u201d<\/p>\n Down the road, the plan will be to expand to Europe as well as to the U.S., where there are already some other services that are trying to tackle the same problem, such as Instant Financial<\/a>\u00a0and\u00a0DailyPay<\/a>. There are also a number of areas the company could move into, such as working with companies that employ contract workers, and providing additional financial services to workers already using the app to draw down funds.<\/p>\n More expansion, Briffett said, will inevitably also mean more funding, particularly on the debt side.<\/p>\n For now, the emergence of Wagestream is an encouraging sign of how VCs are not just interested in tapping their coffers to bet on tech companies that they think will be hits. They also want to hunt for those whose returns may well be strong, but ultimately are made stronger by the longer-term effect they might have on the wider landscape of consumers, how they interface with fintech, and continue their own progress in the world.<\/p>\n Article source: http:\/\/feedproxy.google.com\/~r\/techcrunchIt\/~3\/FNBkSVKbZFY\/<\/p>","protected":false},"excerpt":{"rendered":" Getting your work wages on a monthly (not weekly nor biweekly) basis has become a more widespread trend as the price of running payrolls has gone up, and organizations\u2019 cashflow <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[19],"tags":[25],"class_list":["post-15106","post","type-post","status-publish","format-standard","hentry","category-enterprise-software","tag-enterprise"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t