NEW YORK–(COMMERCIAL THREAD) – Clair, a New York-based early stage fintech startup, wants America’s 82 million hourly workers and 57 million on-demand workers in the United States to be paid as quickly as Uber pays their drivers today: instantly. Today, Clair announced a $ 4.5 million funding round led by Upfront Ventures, with participation from Founder Collective and Walkabout Ventures. Former Venmo COO Michael Vaughan and Seamless Founder Paul Appelbaum also participated in the round.
With soaring unemployment caused by the pandemic, nearly 40% of Americans said they would struggle to cover an unexpected expense of $ 250. When faced with an emergency, they often need to take out high interest payday loans that trap them in a cycle of debt. In response, several payroll and timekeeping service providers announced instant payment features that would give workers the option of being paid daily. Clair is betting these are the first signs of an upcoming wave that will dramatically shorten the standard two-week pay cycle.
Additionally, by offering instant payment services to emerging concert platforms in addition to traditional workforce management systems, Clair hopes to help them win over and retain new freelancers. A 2019 report showed that 65% of skilled workers would consider switching to a paid platform faster, while 85% said they would work more often if they were paid faster.
Free capital and digital bank accounts for hourly workers
“We’re thrilled to be one of the only sources of free capital for hourly workers and concerts in the United States,” said Nico Simko, co-founder and CEO of Clair. “We believe that everyone should be able to freely access the money they have already earned. In the United States, there are more payday lenders than McDonald’s who charge an average of over 300% annual interest on loans. So we have a simple vision: it’s time to change. Simko spent several years with the JP Morgan Wholesale Payments team after graduating from Harvard with an economics degree.
Clair integrates its financial services into workforce management, payroll and concert platforms. Workers who choose Clair as their direct deposit account can get free advances on a portion of their earned wages, which they can access using their Clair debit card. The advances are then deducted from their account during the next payday. Clair generates revenue through debit card interchange fees paid by the merchant where these cards are accepted.
“We are delighted to support a social impact-driven FinTech with a strong business model. Many fintechs that we’ve seen often struggle with profitability because their customer acquisition costs are so high, ”says Aditi Maliwal, partner at Upfront Ventures who now sits on Clair’s board of directors. “We believe Clair’s strategy of creating an integrated product with other services that workers already use today is a strategy that will set them apart in the long run.
Extend Instant Paid Access to Small Businesses
Clair provides workforce management software vendors with a suite of turnkey products and APIs, enabling them to set up instant payments and deliver Clair’s financial services products to their customers within days.
“With employees in small businesses making up almost 50% of the nation’s workforce, employers often don’t have enough scale to deliver better benefits on their own, so they look to their suppliers. software, ”explains Simko. “By activating these providers, we are bridging a gap and giving them the functionality that their users want.”
Complete financial freedom, not just advance payments
Beyond payday advances and banking, Clair also wants to be a financial partner for its users. Today Clair users can also set automatic reminders to save money, but the company has several other savings features in its pipeline.
“For us, success means that after a few years of using Clair, our users no longer need to ask for salary advances because we have helped them live from paycheck to paycheck,” explains Simko.
With 78% of Americans still living paycheck to paycheck, the team will have a long way to go for them.
Clair is a New York-based fintech startup that provides instant paid access as a service to human capital management platforms and the gig economy. With Clair, employees and contractors have access to a digital bank account that allows them to get a portion of their earned wages as soon as they finish their work. Banking services provided by FDIC member Synapse partners. For more information, visit getclair.com.
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