Frontline workers and those paid by the hour rather than wages have become a prime target in the world of enterprise IT, with a wave of apps helping them find jobs, do their jobs and communicate better with each other. In the latest development, a UK startup building what it describes as a financial “super app” specifically for employed workers and their financial wellbeing is announcing a funding round to double down on its strategy. Wagestream, best known for working with employers to enable salary advances for employees through an app, has raised $175 million, money it will use to continue adding more features to the app and to fueling a big push into the US market.
“We’re trying to solve workers’ financial problems,” said Peter Briffett, the CEO who co-founded the company with Portman Wills (CTO). “We are building a positive path for frontline workers, who can now save $60,000 to $70,000 for the first time. »
This is a Series C and it comes in the form of $60 million in equity and $115 million in debt.
The equity portion is led by Smash Capital, funds and accounts managed by BlackRock; and debt financing comes from Silicon Valley Bank. Wagestream has raised approximately $257 million in debt and equity, and it is not disclosing its valuation with this round. Notable for the company’s structure and capitalization table – and one of the key ways it has differentiated itself from the cloud hanging over the concept of ‘payday lenders’ in the UK and US – is that it is built on a social charter and is part- owned by UK-based financial charities and impact funds – in particular, the Joseph Rowntree Foundation, Barrow Cadbury Trust, Social Tech Trust, Capital of big societyand the Just by design funds. Other backers from previous rounds include Village Global, the social impact VC backed by Jeff Bezos and Bill Gates.
As a measure of Wagestream’s performance, the company continued to grow. Currently, more than one million workers from 300 employers have access to the app worldwide. It has seen the strongest growth recently in the United States, where 250,000 retail, hospitality and healthcare workers have access to Wagestream through their employers (the deal is with the latter). , but it is up to the workers themselves if they want to use it or not ). Clients include big names like Burger King, Popeyes, Crate & Barrel and the University of Chicago.
Apart from the US and UK, other markets in which Wagestream is currently active include Spain and Australia.
The problem he tackles is simple: salaried workers, partly because of how they are paid and how much they are paid, often find it very difficult to save money instead of spending it pays by paycheck.
This is partly because of the huge amount of money they have, but also because of the cadence of their payment (weekly or bi-weekly versus monthly) and simply because of the tools built into their salary to facilitate payment. save and use the funds for something other than everyday life. The idea with Wagestream is not just to give these workers faster cash when they need it, but to give them the ability to use that money in different ways – for example with features to invest small We’re taking action and putting controls in place to save money incrementally in a way that makes the most practical sense for those users. There are also options to consult with a financial coach, and similar to superapps from other neobanks, Wagestream “learns” about users to customize further suggestions regarding a user’s finances.
What’s interesting, Wills said, is that employers themselves are “leaning” more into working with Wagestream because they’ve started to see it as a sweetener when recruiting staff, and also to help reduce employee churn, which is a persistent problem in the world of paid work.
He noted that there are currently some 12,000 jobs listed on Indeed.com (a recruitment platform commonly used in this industry) that advertise Wagestream as a benefit for those wishing to apply.
“It’s hard to recruit people and we become an asset for retention and recruitment,” he said. “And we’ve found that people actually put in more hours of work if they have access to the money sooner than they’ll be paid. This helps them budget better for their financial lives.
The move to the United States will bring a new set of challenges to Wagestream, but also potentially new opportunities. The UK, where it has most of its customers today, has 11 major banks, and most people have bank accounts, not least because it’s completely free for them – no fees, etc. This means that Wagestream has not focused on creating a “banking app” for UK users.
The United States, on the other hand, has no less than 4,300 banks, and yet it still has a massive population of “unbanked” and “underbanked” among salaried workers, because in fact many banks charge various fees, making it a cost. many do not want to endure.
“About 28% use check cashing services” — rather than having funds deposited into accounts, Wills said. “That means a paper paycheck and paying someone 10-12% of net pay to cash a check. So a prepaid card product is very high on the roadmap in the United States for us. This would give users the option to forgo a check cashing service and associated fees, and potentially use that discount for something else, like investments.
Covid-19 has shone a spotlight on frontline workers – the essential people who have had to continue doing their jobs in difficult circumstances while so many others are settled in home offices – and their ranks are certainly not disappearing, with about 2 billion of them worldwide. It’s honestly great to see more built to meet their needs.
“The combination of financial exclusion and the rising cost of living has created severe financial stress for hard-working Americans,” Brad Twohig, managing partner of Smash Capital, said in a statement. “We invested in Wagestream because its team has reinvented the world of work, making it more accessible and rewarding for millions of people.”