Wagestream, founded only last year, has just secured a Series A funding round of £15m. In addition to this they have obtained a credit facility of up to £25m by Shawbrook Bank. The £15m funding round was co-led by venture capital investors Balderton Capital and Northzone. This brings the total up to £40m. For a social fintech startup that’s been running for just over a year, £40m is extremely impressive. In fact, Wagestream’s CEO, Peter Briffett, believes it may even be the largest social impact investment in the UK.
Tackling Payday Poverty
Wagestream, put simply, allows employees to withdraw a percentage of the wages that they’ve already earned during that month, at any point. This means that employees don’t have to wait 28 days to see their hard-earned cash – they can get payed whenever they request it via Wagestream’s simple to use App. This is beneficial for low-income families that get an unexpected cash crisis but don’t have the savings to cover it. Examples could be an insurance pay-out, appliance replacement or an end of month birthday Party. For the flat fee of £1.75 a go, Wagestream allows them to get early access to some of their wages.
Payday loans, credit card use and overdraft interests can be easier to avoid thanks to this social FinTech startup. As a result, workers say that they have a lower level of financial stress and appreciate the flexibility of access to their wages. Furthermore, the app also teaches financial literacy to the employees. This way they can learn how to spend and save their wages more effectively. This leads to an overall better financial health. Consequently this helps to eradicate those ‘Poverty Premiums’ by companies that take advantage of low income families by setting unfair interest rates.
Wagestream boasts of a 20% productivity increase by the employees who use their service. Workers opt for more overtime as they can withdraw this extra pay straight after their shift. This means they can enjoy the fruits of their labour in real-time. Furthermore, the extra control over their wages and flexibility means that there has been an increase in employee retention. In addition, even job applications have seen a large increase in the companies that offer Wagestream’s service.
The Future of Social FinTech Startup Investments
“Hopefully this is the start of a new wave of ‘social venturing’. Where leading European VCs get behind tech businesses with a social purpose,” said Briffett. As we already know, the interest in Social Impact Investment has increased considerably with investors. If you’re curious as to more information about Social Impact Investments then check out our previous article. Now, will this large investment create a tipping point for the investment interest in social FinTech startups? What do you think?..
She studied International Business, International community work and Social Inclusion. Additionally, she has extensive experience in social and public relations where she has worked for governmental institutions and private companies.