Flexible wage app, Wagestream, which campaigns against payday poverty and seeks to end the financial stress caused by the monthly pay cycle, has secured the largest social impact investment ever in the UK.
The firm’s latest round sealed this week — with early-stage venture capital specialists Balderton and Northzone co-investing together — adds £15m resulting in a total raise of £40m.
The funding total means that Wagestream — which allows staff to draw down a percentage of their earned wages any day of the month for a flat £1.75 fee — has attracted the largest pool of social impact investment in UK history.
With Wagestream, there are no loans involved and therefore no interest is charged.
Tech investor Balderton has raised £2.7bn over 19 years and has backed startups including Revolut and Nutmeg, while Trustpilot-backer Northzone has raised €1bn, targeting more than 130 companies since 1996.
This latest round comes on the back of earlier investments from QED, co-founding Investors in Wagestream, the Joseph Rowntree Foundation, the London Co-investment Fund (LCIF) and Village Global — a global VC backed by leading entrepreneurs including Bill Gates and Jeff Bezos — on top of a wholesale funding facility of up to £25m from specialist savings and lending bank, Shawbrook.
Venture capital and professional funders measure the investment worth of companies by looking at the full range of their capital resources.
Wagestream is on a mission to end in-work poverty, eradicate payday loans and destroy the ‘Poverty Premium’, whereby people on low incomes pay more for a range of essential products and services such as insurance, energy, and credit.
Wagestream is doing this by short-circuiting the monthly pay cycle — an antiquated monthly windfall that forces workers into the hands of payday lenders and other high-cost lenders when they approach the end of the month or face unexpected expenses.
Rapid adoption of the Wagestream platform by UK corporations proves employers are willing to invest in staff financial wellness and tackle in-work poverty.
Employers from across the private and public sphere including Rentokil Initial, Hackney Council and Roadchef have identified a number of CSR and HR advantages to the service.
For example, staff have greater financial security, which breeds loyalty, and 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 Joseph Rowntree Foundation’s investment came through the Fair By Design Fund, a movement committed to tackling the Poverty Premium by changing essential services so they don’t cost more to low income consumers. It is a joint partnership with JRF, Big Society Capital, Barrow Cadbury Trust and Tech Trust.