Earned wage access startup raises funds to target small-business employees
New York-based earned wage access (EWA) startup Clair has raised $4.5 million in a seed fundraising round to target the small-business market.
The seed round was led by Upfront Ventures with participation from Founder Collective and Walkabout Ventures. Additional individual investors included Michael Vaughan, the former COO at Venmo; and Paul Appelbaum, founder of meal delivery giant Seamless, which was previously merged with GrubHub and most recently acquired by Just Eat Takeaway.com. The $4.5 million in funds will be used to expand Clair’s product portfolio.
“Funds will be used to invest in our growth such as partnerships, building the operations and the product,” said Nico Simko, co-founder and CEO at Clair. “The key difference we bring to the earned wage market is a singular focus on small business employees and gig workers, whereas others focus on large employers.”
As the EWA market becomes more crowded, the distinctions between the various competitors become more important. Clair is seeking to stand out from the crowd by bringing a solution that is aimed to serve small business owners and freelance platforms that want to be able to offer faster wage access, but don’t have the capital to engage with companies such as PayActiv, which currently serves Walmart’s 1.5 million associates in partnership with Even.
Clair seeks to work with human capital management and timesheet software providers by integrating with them so that they can offer EWA services to their small business clients. It also is working with freelance platforms that are now experiencing a boom in new gig workers as general unemployment has grown. One area Clair stated that it is targeting is the freelance nursing market that matches traveling nurses with hospitals for short-term contracts.
Clair’s product suite includes a mobile app that allows users to request funds, manage their money and learn about financial wellness. It also offers a savings account and a checking account with a debit card issued by Evolve Bank & Trust, the same company behind EWA competitor Branch’s debit Mastercard.
“We want the employee to be able to access their earned, but not yet paid wages free of fees and subscriptions so we don’t charge users,” said Simko. “We generate revenue from our debit Mastercard through the interchange when it’s used.
The EWA market is exploding with consumer demand at a time when unemployment levels have been driven sky-high due to the COVID-19 pandemic. According to a recent PaymentsSource Future of Money survey conducted in September 2020, two-thirds (68%) of adults find the ability to match incoming cash flow with outgoing bills as critical or very important.