Fueling its market expansion, U.K. earned wage access startup Wagestream has raised £20 million (about $25 million) in a Series B fundraiser from several VC firms.
The Series B round was led by early-stage venture capitalist Northzone and joined by other VCs including QED Investors, Latitude Investors and Balderton Capital. Wagestream stated that with the Series B, its total investments raised to-date have reached £65 million (about $82 million). The funds will be used to expand domestic market share as well as fuel an international expansion effort.
“We are excited to continue our investments into Wagestream as we were one of the first investors in the company,” said Nigel Morris, co-founder and managing partner of QED Investors. “The team is terrific and doing amazing stuff. They are gathering momentum in gaining market share in the U.K. and plan to expand to continental Europe. The Wagestream team has the wind at their back as consumer demand for this service grows.“
Wagestream is one of a growing number of startups designed to deliver early, earned wage access to millions of hourly and gig workers in the U.K. so that they can pay bills on time and avoid falling into the hands of predatory lenders. Just last May, investors including QED poured £15 million (about $19 million) into
In June, Manchester, U.K.-based rival
Earned wage access appears to be a growing, global phenomenon with several companies in the U.S. also gaining momentum such as
The
In a separate interview discussing the U.S. startup
The model Wagestream offers to HR departments is a menu-based approach to earned wage access with limits and rules that can be customized to each employer. The staffer, whether a full-time employee or gig worker, is able to access a percentage of their earned, but not yet paid wages before the date of the payday.
The £1.75 fee to access earned wages is paid by the employee. Morris likened the cost to an ATM fee and said that it is accessing earned wages and therefore it is not a loan.
“Earned wage access is a category killer for other financial services,” said Morris. “It’s a universal need of employees and gig workers around the globe. That’s why we have invested in companies similar to Wagestream in other countries such as
QED Investors has a strong focus on helping the global underserved consumer segment, as Morris noted that traditional banks have little interest in serving customers with low credit scores and little money. Other investments in the QED portfolio include U.S. challenger bank Current,