UK’s Largest Social Fintech Startup Investment?

Wagestream, a social FinTech startup 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 LINK. The £15m funding round was co-led by venture capital investors Balderton Capital and Northzone. LINK. This brings the total up to £40m, which for a social fintech startup that’s been running for just over a year, is extremely impressive. In fact, Wagestream’s CEO, Peter Briffett, LINK 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 so that they can learn how to spend and save their wages more effectively. This leads to an overall better financial health, which in turn helps to eradicate those ‘Poverty Premiums’ and unfair interest rates.

Employer Benefits

Wagestream boasts of a 20% productivity increase by the employees who use their service. Workers opt for more overtime and can withdraw this extra pay straight after their shift, meaning they can enjoy the fruits of their labour in real-time. Furthermore, the extra control over their wages and flexibility means that employee retention and even job applications have seen a large increase in 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, interest in Social Impact Investment has increased considerably with investors over the years. Now the question is whether this landmark investment will create a tipping point for the investment interest in social FinTech startups?