Front-line workers and those paid in hourly wages rather than salaries have become a prime target in the world of business IT, with a wave of apps helping them find jobs, do their jobs, communicate with each other better. In the latest development, a UK startup building a financial app for waged workers and their financial well-being is announcing a round of funding to double down on its strategy. Wagestream has raised $175 million and will use it to fuel a big push into the U.S. market, as it is known best for working with employers to enable salary advances for employees by way of an app.
Peter Briffett, the CEO who co-founded the company with Portman Wills, said that they are trying to solve financial pains for workers.
$60 million in equity and $115 million in debt are coming from this Series C.
Smash Capital, funds and accounts managed by BlackRock, and Silicon Valley Bank are financing the equity portion. Wagestream has raised about $257 million in debt and equity, but it is not revealing its valuation with this round. Notable to the company's structure and cap table, and one key way that it has differentiated itself from the cloud, in the UK and the U.S. Village Global is backed by the likes of Bill Gates and Jeff Bezos.
Wagestream has been on a roll in its growth. More than 1 million workers have access to the app. The US has seen the strongest growth in the last few years, with 250,000 retail, healthcare, and hospitality workers having access to Wagestream through their employers. Burger King, Popeyes, and the University of Chicago are just a few of the big name customers.
Wagestream is active in Spain and Australia.
waged workers find it very challenging to save money against spending it paycheck to paycheck because of how they are paid and how much they are paid.
Part of that is because of the amount of money that they have, but also because of how they get paid, and the tools that are incorporated into their pay to make it easier to save and use the funds for more than regular. Wagestream's idea is to give workers the ability to use their money in a variety of ways, including investing small amounts into stocks, and to bring in controls to save money. Wagestream has options to consult with a financial coach, and similar to other neobanks, about users to personalize their finances.
Wills said that employers themselves are leaning in to working with Wagestream more because they are starting to see it as a way to help reduce staff.
He pointed out that there are 12,000 jobs listed on Indeed.com that advertise Wagestream as a benefit for those interested in applying.
It is hard to recruit people and we become a retention and recruitment benefit. They budget their financial lives better.
The move into the U.S. will bring new challenges and opportunities to Wagestream. Most people in the U.K. have bank accounts because it's completely free for them and there are so many of them. Wagestream hasn't focused on building a banking app for U.K. users.
The U.S. has 4,300 banks, but it still has a lot of people who are unbanked and underbanked.
A paper paycheck and paying someone 10% of net wages to cash a check is what many people are using check cashing services for. A reloadable card product is high on the agenda for the U.S. for us, it would give users the option of foregoing a check cashing service and the associated fees, and potentially using that cut for something else, like investments.
An estimated 2 billion frontline workers are still working around the world, despite the fact that many of them were ensconced in home offices. It is great to see more being built to address their needs.
Brad Twohig, Managing Partner at Smash Capital, said in a statement that the combination of financial exclusion and a rising cost of living have created severe financial stress for hard-working Americans.
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