LONDON--(BUSINESS WIRE)--Income streaming provider, Wagestream, which enables employees to access their earned wages in real time, today announced it has completed a £20m Series B funding round.
This latest investment — which takes the total raised to £65m — will be used to consolidate the company’s dominant market share in the UK and to fund its international expansion.
Early-stage venture capital specialist Northzone is leading the funding round with participation from QED Investors, Latitude Ventures and Balderton Capital.
Since 1996, Northzone has raised more than £1.4bn and made over 150 investments in companies including Spotify, Zopa and Trustpilot. QED Investors is a leading venture firm specialising in disruptive fintech companies. QED has backed companies including Clearscore, Fidel, Capitalise, Restless, and Zopa.
Latitude Ventures, the Series B+ growth sister fund to LocalGlobe, is known for investments in Transferwise, Zoopla, Monzo, Citymapper and SecretEscapes. It was launched in 2018 by LoveFilm co-founder Saul Klein, Robin Klein and Julian Rowe.
Tech investor Balderton has raised more than £3bn over 20 years and has backed start-ups including Revolut and Nutmeg.
Wagestream’s earlier stage investors include The Joseph Rowntree Foundation through the Fair By Design Fund, QED Investors, the London Co-investment Fund (LCIF) and Village Global — a global VC backed by leading entrepreneurs including Bill Gates and Jeff Bezos.
Wagestream, which enables staff to draw down a percentage of their earned wages any day of the month for a flat £1.75 fee, has seen demand for its product skyrocket among major UK brands over the past year. New client sign-ups were particularly strong in the second quarter, as employers sought to make their staff more financially resilient in the face of Covid-19.
The latest brands and organisations to embrace income streaming include Honest Burgers, SA Brain, Fuller’s and two NHS trusts (Camden & Islington NHS Foundation Trust and Lincolnshire Partnership NHS Foundation Trust).
By enabling staff to access their pay as they earn it, Wagestream gives them far greater flexibility with their finances. This means they can avoid taking out expensive short-term loan facilities or credit, should they be faced with a financial emergency. With Wagestream, there are no loans involved and therefore no interest is charged. Access to earnings means many forms of high- interest credit are easier to avoid.
Wagestream clients have identified a number of CSR and HR advantages to the service. For example, employees have greater financial flexibility and security, which increases staff loyalty, while employers trying to fill overtime shifts, particularly during unsociable hours, have noticed it becomes easier to do this once they use Wagestream.
This is because employers can elect to give workers access to that pay as soon as their shift is over — thereby re-establishing the link between work and reward. In fact, research shows that shift workers choose to work 22% more hours on average once enrolled in Wagestream. The company’s research showed that 77% of users felt less stressed, 38% had avoided going into their overdraft and 43% said they’d avoided using a payday loan.
Through its Safestream savings product, Wagestream also enables users to put aside a small amount of their pay before it is paid to them. This means it avoids landing in their current accounts and so is less likely to be frittered away, again boosting financial resilience.
Wagestream is leading a growing trend in workplace financial services, and building technology to allow the employer to be the provider of a new wave of fair financial products, that boost the financial resilience of staff and also protect them from predatory consumer lenders.
Peter Briffett, CEO and Co-Founder, Wagestream, commented:
“Where people work and how they work is changing by the day, all the more so since Covid-19 struck. Now the way in which people get paid is changing, too, and at scale. Wagestream provides a financial flexibility that is perfectly suited to today’s agile and progressive workforce.
“Income streaming is a fast-growing alternative to the antiquated monthly pay cycle, and is being embraced by more brands, charities and organisations by the day as it boosts employees’ financial resilience. Each day, too many staff in too many companies are being forced into the hands of predatory payday lenders because they are only paid their earnings once every 30 days, enabling people to access their earned wages anytime keeps them out of debt and also incentivises them to do more shifts because they are motivated by the ability to use that extra income immediately to make specific purchases.”
Jeppe Zink, Partner, Northzone added:
“Income streaming is a unique innovative financial solution that improves people’s lives and there is no doubt that, in the future, Wagestream will become as important as any other benefits like healthcare. The increasing popularity of income streaming, and the way that employers are fast getting wise to how they benefit hand in hand with their staff, is tracking the trajectory we all expected to see, which is outstanding progress.”
Nigel Morris, Managing Partner and co-founder of QED Investors, commented:
“While the pace of innovation and change is only going to accelerate in a post-Covid world, today, there is still vast financial and economic inequality across the globe. Wagestream’s mission of providing a way for workers to access their earned wages when they need it is more essential now than ever. Being in the vanguard of such a crucial endeavor, Wagestream is poised for tremendous growth and will continue to deliver enormous value as the world emerges from this crisis. The service is worker-centric making it indispensable for progressive employers.”
Julian Rowe, partner, Latitude Ventures, added:
“Wagestream is building an iconic, trusted brand in the emerging ecosystem of ethical financial services providers. It speaks to today’s consumer who demands apps that empower them through true alignment. Employers are quickly expanding their understanding of their responsibilities towards employee welfare - Wagestream supports this by enabling employees to avoid high-cost debt. We see income streaming as a default setting for tomorrow's employers and the perfect tool to boost employees’ financial resilience at all points in the financial cycle, but especially those that could lie ahead.”
Rob Moffat, Partner, Balderton Capital, commented:
"Wagestream has gone from strength to strength since the last round and so, for us, doubling down was an easy decision to make. The feedback from employers and employees alike is positive across the board and the number of companies adopting this way of paying their staff has now passed that all-important tipping point. Wagestream is going mainstream and we are excited to play a part in its growth story.”
Jonathan Levy, Investment Portfolio Manager, Joseph Rowntree Foundation, added:
“Many of the low paid who have kept the country running during the Covid-19 crisis, including key workers, are most vulnerable to the economic shock to come.
“Financial inclusion tools that reduce the poverty premium and help prevent those on low- incomes from relying on credit due to the painful effects of the monthly pay cycle are going to be essential post-pandemic if these workers are to avoid a vicious cycle of debt.”
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Notes to Editors
Wagestream is on a mission to bring better financial health to workers across the globe. By putting workplace data into the hands of workers, Wagestream’s financial solutions allow employees to track, budget, save and stream their earnings, all in real time.
Wagestream unlocks the constraints of the monthly pay cycle, and eradicates the debt issues and financial stress many workers face between pay days by giving them instant access to their earned wages. Wagestream was founded with a social purpose and its early charity investors include Fair by Design, Joseph Rowntree, Barrow Cadbury Trust, and Big Society Capital, social impact charities committed to improving the financial wellbeing of everyday people.
Wagestream Ltd is registered with the Financial Conduct Authority as an EMD Agent (reference 902046) of PayrNet Limited, an Electronic Money Institution authorised by the Financial Conduct Authority (reference number: 900594).