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On-demand pay goes mainstream

Why do employees have to wait until the end of the month to be paid? Why not pay employees in advance from say a continuous stream or on-demand?

It might surprise you, but more startups are offering on-demand pay, flexible earned wage access (FEWA) and salary on-demand. On-demand pay provides an alternative to payday lending, overdrafts, and credit cards, which all carry higher fees - and it could be a solution to combat financial stressors on employees.

Trends like less full-time employment, diminishing living wage growth, stagnating saving rates and increasing household debt, are creating more financial distress for workers. Living "paycheck to paycheck" with no cash for emergencies and staying afloat with the financial stress of the COVID-19 pandemic also hasn't helped, especially in the US and UK.

This has serious consequences for employers, as 20% of turnover is caused by financial stress and 56% of employees identify having to pay expenses before receiving their salary contributing to their financial difficulties.

Source: EY Employee Financial Wellbeing Survey, June 2020

However, there is a silver lining. Investor interest in on-demand pay startups and scale-ups seems to have picked up in 2021, with $443M invested globally and 2022 kicked off strong with already $355M raised.

Some on-demand pay startups and scaleups are achieving notable milestones within their market: US-based Dave has gone public at a $4B valuation and London's Wagestream raised yesterday $175M in Series C funding.

On Dealroom.co, we've mapped 60+ companies offering on-demand pay. Discover the latest on-demand pay companies from various regions around the world by clicking the button below.👇

In other news

💡 The real reasons why Fast failed - Bolt founder

😢 The dystopian stablecoin. Deception, exploited workers, and cash handouts: How Worldcoin recruited its first half a million test users - MIT Technology Review

In my view, this is as much dystopian as you can get: deceptive marketing privacy, lack of consent, shady data collection and total lack of transparency.

💰 Many challenger banks are starting to achieve profitability - Moody's 

📨 An open letter to EU representatives about crypto regulation MiCA - web3 community in Europe.

💳 Demystifying Crypto: Shedding light on the adoption of digital currencies for payments in 2022 - Checkout

Latest fintech deals

The largest this week:

🇺🇸 Binance.US, the American arm of the world’s biggest cryptocurrency exchange, raised a $200M Seed round. The funding, which values the company at $4.5B, was led by RRE Ventures, Foundation Capital, Original Capital, VanEck and Circle Ventures.

🇺🇸 In January, FTX US was similarly valued at $8B in a $400M Series A.

🇮🇳 Credit card startup Cred raised $200M from GIC reaching a $6.5B valuation. Cred offers premium credit card users rewards and benefits for paying credit card bills. 

🇸🇬 Singapore-based sovereign wealth fund GIC has invested heavily in Indian Fintech startups like RazorPay and PayTm. 

 
🇺🇸 Alternative Investment Platform CAIS raised $100M joining the unicorn club. Alternative investments startups raised $2.3B last year, growing 4x and started 2022 strong.

🇬🇧 A consortium of investors headed up by private equity heavyweights KKR and TDR Capital has pledged to invest up to £120m in credit card lender Jaja Finance, after taking majority control of the company.

Other notable fintech deals from around the globe:

🇺🇸 Bitcoin payment company Lightning Labs raised a $70B Series B to support a protocol it has built called Taro, which would allow stablecoins to be transferred on Bitcoin’s Lightning Network. 

The Lightning Network is a layer-two solution for Bitcoin transactions, enabling instant, low-fee transactions with Bitcoin—but without using Bitcoin’s blockchain verification for each transaction.

🇬🇧 Financial infrastructure startup Fidel API has raised $65 million in a Series B funding round led by Bain Capital Ventures. The London-based company provides identity, data and payments products that give developers a way to capture consent permissions and “securely” connect payment cards to a service or application. 

Read up on all the latest fintech deals in Dealroom.co

Notable exits:

🇺🇸 One-click checkout company Bolt acquired crypto services startup Wyre Payments for $1.5B. Wyre is a leading on-ramp for Web3 applications and has seen tremendous growth and success in the past 24 months as new verticals have emerged in the industry like NFTs, DeFi and self-hosted wallets.

Tip of the week

Keep track of what your competitors/leads are doing without effort!

You can create a query like this of Hot European seed-stage payments startups --> click on Save & export --> give it a name and save it. From that moment you will receive notifications if something happens, like one of the companies receiving funding or making the news for product launches/key hires!

Job opportunities

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And Dealroom.co is hiring for 10 positions, including a Senior AI Engineer, Senior Data Engineer and Account Executive.

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Dive in

💳 The rise of Alternative Payments

📈 New report: The rise of Embedded Finance 

🌍 Crypto Regulation: EU vs. US

Lorenzo Chiavarini

Innovation Analyst
Dealroom

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