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Earnpay raises $4M to facilitate access to salaries in Nigeria
Earnpay, a fintech startup that provides flexible and on-demand salary access, has raised $4 million in seed financing to facilitate the Nigerian employees’ salaries. The funding round was led by an early-stage venture capital firm Canaan.
XYZ Ventures, Village Global, Musha Ventures, Voltron Capital, Ventures Platform, and Paystack CEO Shola Akinlade are Participating investors.
Earnpay was launched in January 2022 and has been in beta since September 2021. The fintech startup plans to offer its on-demand salary solution to 200,000 employees in Nigeria by the end of 2022.
Unlike more developed countries like the U.S., where weekly or bi-weekly salaries can take care of this lifestyle, most of Africa’s workforce is paid monthly but live paycheck to paycheck.
Low monthly wages — which is the norm in Africa — can’t follow the U.S. system. So what happens is that income-earners take salary advances or borrow money from payday lenders and loan sharks to offset their daily expenses and emergencies, ending up falling into a debt cycle.
Earnipay founder and CEO Nonso Onwuzulike tried to tackle this problem internally by allowing employees to access their daily salaries as they work for it while running Reaval (a Ghana-based recycling business he started on the side in 2019).
Onwuzulike, who had worked most of his life in the formal sector — even holding the position of country manager of Bolt Ghana during this period — was accustomed to paying and receiving monthly salaries, which caused problems for his recycling business.
His employees were waste collectors from the informal sector, with a history of collecting daily or weekly payments.
The founder said describing the salary situation at his former company “There were adverse effects of that long wait time between pay cycles, especially for these people who didn’t earn a lot of income,” resume “They ended up not being productive because they had money issues and it led to attrition and retention problems for me because these were guys who are used to getting paid immediately, but I was paying them once a month, and it didn’t make sense to them.”
Onwuzulike developed a solution to make their payment flexible: weekly or bi-weekly. He then figured he could scale it to companies in the formal sector, and there was data to back this decision.
About 80% preferred having flexible access to their salaries rather than the salary advance option popularly pioneered by banks (Per a survey carried out among a few income-earners who worked in the formal sector).
That’s how Earnipay came to be, with Busayo Oyetunji and Joshua Ajayi joining as COO and CTO.
Onwuzulike describes the company as (a financial wellness solution for employees), of which its first product is on-demand salary access, while Earnipay is creating what is known globally as an earned wage access platform.
The platform integrates with companies’ existing payroll or HRM systems to offer its services to employees, who can then track and withdraw their accrued salaries via the app.
Employees’ salaries are prorated daily, and companies can set limits for the percentage of salaries employees can withdraw each month. For instance, if an employee earns ₦300,000 monthly, they can get ₦10,000 daily (for 30 days) or ₦15,000 (if the employer sets the system to count only workdays; 20 in this case).
Earnipay makes these payments on behalf of the company, especially those whose cash flow may be affected should they finance the earned wage payments themselves. At the end of each month, these companies reimburse Earnipay. But for others who can afford to, Earnipay sets up a reconciliation account on top of employees’ salary accounts with scheduled automatic reimbursements.
But where do Earnipay’s revenues come from?
For withdrawals between ₦2,000($4) and ₦10,000 ($20), Earnipay collects a ₦250 ($0.5) fee. It comes from charging employees a fee for accessing a part of their salary early. For ₦10,000 to ₦50,000 ($100) withdrawals, the charge increases to ₦500 ($1).
Earnipay has served over 20 businesses, outsourcing firms, and H.R. solution providers in Nigeria, Since operating in beta.
The company said that Some of its clients include Eden Life and Thrive Agric, whose “thousands of employees” have used the app to access their salary over 1,000 times.
Highlighting other products his company has in the pipeline, Onwuzulike said, “We are super bullish on the product that we were building. Our goal is financial wellness for all, and we want to build products in line with that. We’ve taken the first step, which is affordable access,”
Resume “The second product that we’re building is financial education to provide people with financial literacy tools so they make better spending decisions. We will build products around that primarily just so that we’ll enable employers to make their employees happier, improve productivity, retain talent, and solve the biggest problem in the workplace today that nobody is solving, which is employee money issues.”
Earnpay might face competition from YC-backed South African startup FloatPays, which plans to expand across the continent. Still, it will use this seed funding to target large enterprises and shift its focus regionally.
The experiences of Earnipay’s investors in backing identical companies across emerging markets will be pivotal to the Nigerian fintech’s growth.
XYZ Capital is an investor in Refyne; a two-year-old Indian earned wage access platform that recently raised $82 million in Series B. The San Francisco-based venture capital firm also backs Mexico-based Minu alongside Village Global.
Brendan Dickinson, a general partner at Canaan, said, “We’ve seen earned wage access multiply in many markets and believe it’s a natural fit in Africa,” resume “Earnipay has quickly established itself with a product built specifically for the payroll behaviors of this region, and early employer uptake is solid. Nonso has built one of the strongest teams that we’ve met on the entire continent, and we’re thrilled for the opportunity to partner with them.”
This marks the first investment in an earned wage access platform; judging from its portfolio for Canaan, Earnipay presents an opportunity for the Connecticut-based fund to participate in a good fintech category witnessing an increase in uptake across emerging markets.
Lendo, a Saudi Arabia-based Shariah-compliant crowdlending marketplace, has signed a Memorandum of Understanding (MOU) today with J.P. Morgan to improve access to financing for small and medium-sized enterprises (SMEs) across the country.
The MOU was signed during 24 Fintech, a premier fintech event that brings together industry leaders, innovators, and investors in Riyadh.
J.P. Morgan and Lendo are working together on potential opportunities to support the SME sector in Saudi Arabia in growing and sustaining the remarkable demand in this market.
“This strategic collaboration with J.P. Morgan, a pioneer in the financial industry, marks a significant milestone for Lendo,” said Osama Alraee, CEO and co-founder of Lendo. “By combining our strengths, we’ll deliver cutting-edge financial solutions to SMEs, supporting their growth and contributing directly to the realization of Saudi Arabia’s Vision 2030.”
The SME financing landscape in MENA presents a substantial market opportunity as limited financial access continues to restrict the growth of the region’s businesses, with commercial banks hesitant to issue loans to SMEs at scale, resulting in a high percentage of declined financing requests annually.
The total SME financing gap in developing countries is estimated to be approximately $5.2 trillion, according to the International Finance Corporation (IFC).
Lendo’s debt crowdfunding platform aims to bridge the financing gap for SMEs, aligning with Saudi Vision 2030’s goal to significantly expand SME lending from 4% in 2018 to 20% by 2030.
According to the latest available report from the Saudi Central Bank (SAMA), the total value of debt crowdfunding in Saudi Arabia surged from SAR 1.4 million in 2019 to SAR 771 million in 2022, marking a remarkable growth.
Lendo raised SAR 132 million ($35.2 million) in total funding from leading investors, including the most recent Series B led by Sanabil Investments, a wholly-owned company by the Public Investment Fund (PIF).
Since its inception in December 2019, Saudi fintech Lendo has processed over 5,000 financing transactions on its platform, providing over SAR 2 billion ($600 million) in financing to SMEs and generating SAR 280 million ($74 million) in returns for investors.
TA Telecom, a prominent player in the Middle East’s tech sector, has unveiled AnteThink, an AI-driven tool designed to enhance decision-making processes for individuals and businesses alike.
With a history of influencing the tech landscape through various initiatives, including advanced mobile solutions, high-volume payment platforms, and ventures in e-commerce, fintech, and analytics, TA Telecom has carved a niche for itself. Serving a vast user base of 40 million and processing an impressive 15 billion transactions across its platforms, TA Telecom has cemented its position as a tech industry leader, with some of its ventures achieving the status of Y Combinator companies.
Established in 2000, TA Telecom has emerged as a prominent player in the technology sector. With over 40 million users and processing 15 billion transactions annually, TA Telecom has made a notable impact. Recognized for its contributions by the Financial Times and featured on Deloitte’s list of fastest-growing tech companies in EMEA, TA Telecom is known for its adaptability and forward-thinking approach in the ever-evolving global tech landscape.
Sameh Ibrahim, CEO of TA Telecom, highlights the potential of AnteThink: “AnteThink reflects our commitment to leverage technology for practical impact. It aims to provide clarity and confidence in decision-making, whether in the professional or personal sphere. AnteThink is a tool that can empower startup founders, executives, and individuals to make more informed choices, alleviating the stress and uncertainty often associated with critical decision-making.”
Mostafa Ashour, CEO of Y Combinator-backed startup NowPay, shared his perspective on AnteThink: “AnteThink transformed our strategic planning, allowing us to explore various scenarios and prepare for different outcomes. It has strengthened our decision-making process, helping us navigate the complexities of the business landscape.”
AnteThink embodies TA Telecom’s commitment to innovation, focusing on supporting the startup ecosystem. The tool is tailored to help leaders and executives navigate the complexities of business management and strategic development by providing a clear picture of potential outcomes.
Key Features of AnteThink include:
1. Second Order Mode: Offering a comprehensive analysis of broader impacts, fostering a strategic mindset for long-term success.
2. Optionality Mode: Enabling detailed evaluation and comparison of different choices to ensure decisions align with strategic objectives and values.
3. Inversion Mode: Focusing on identifying and mitigating potential risks, thereby strengthening risk management strategies.
Credit: Antethink
AnteThink’s advanced AI technology aims to assist decision-makers with insightful analytics, offering guidance through the decision-making process.
Selina Bieber, the Senior Director of Global Markets at GoDaddy, has predicted a significant increase in Egypt’s e-commerce revenue. By 2028, it could reach $9.88 billion.
Godaddy is forming strategic partnerships and launching initiatives to help local entrepreneurs. These efforts align with Egypt’s digital transformation goals and its Vision 2030.
In an interview with the Arabic financial news “Amwal Al Ghad,” Bieber spoke about GoDaddy’s plans and how they match Egypt’s 2023 strategy. She highlighted the company’s aim to provide effective, easy-to-use digital tools and services. By 2024, GoDaddy wants to serve more customers in Egypt by making its digital tools more widespread.
The company is working closely with the Egyptian government, especially the Ministry of Planning. They are offering training programs to improve the digital skills of startups and existing businesses. GoDaddy’s services in Egypt include domain registration, web hosting, e-commerce solutions, and digital marketing tools.
Recent surveys support Bieber’s positive outlook for e-commerce in Egypt. They show a clear trend towards digital strategies among small businesses. Many are realizing the importance of having an online presence for their growth and success.
As GoDaddy continues its partnerships and supports government digital initiatives, its influence on Egypt’s digital landscape is growing. The company is committed to sustainability and reducing its carbon footprint. It aims not just for business growth but also to contribute to a sustainable and thriving digital economy in Egypt.
The 2028 projection indicates a vast potential for e-commerce, with GoDaddy playing a key role in this digital evolution.
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