Over 70% of Americans live paycheck to paycheck. Nearly half will not be able to handle an unexpected $400 expense. With workers and their families operating on such tight margins, improving the timing of cash flows can be the difference between retaining an employee or having them quit. DailyPay has built a patent-pending platform that allows employers to provide real time access to earned wages to their employees – gone are the days of waiting for every other Friday for that check or deposit. With DailyPay, employees have the flexibility to access their wages as needed while employers can retain talent without having to have them worry about getting paid, changing the way businesses operate and workers get paid.
AlleyWatch sat down with CEO Jason Lee to chat about the company, its origin, the state of the workplace, and the company’s most recent round of funding that brings its total funding to $15.5M
Who were your investors and how much did you raise?
DailyPay raised $9 million in Series B funding from Intercept Ventures with participation from existing investors Inspirational Ventures, RPM Ventures, and Draper Frontier.
Tell us about your product or service.
DailyPay’s mission is to give employees their first step toward financial security. DailyPay is the pioneer in providing employees real-time access to earned wages across a wide range of industries, including cleaning, healthcare, retail, transportation, and more. With DailyPay, employees can pay bills on time and avoid late fees, helping them reach their financial goals. Companies have reported that DailyPay increases employee engagement and retention and helps to support recruitment. DailyPay is backed by leading venture capital firms and world-class strategic investors. The company is headquartered in New York.
What inspired you to start the company?
My cofounder and I saw a major problem in the American workforce… 70% of American employees live paycheck to paycheck and 47% can’t afford an unplanned $400 expense. Meanwhile, many employers suffer from high turnover because their workers are stressed about money. Our solution to this massive problem is to use technology to allow employees early access to earned wages. This allows workers to pay bills on time, make rent, and meet their financial needs. And when employees find financial security at a job, they stay longer.
How is it different?
Payroll hasn’t changed since the 18th century and Americans aren’t satisfied anymore with the status quo. DailyPay has pioneered the DailyPay Movement by offering employees instant access to earned wages in order to improve financial lives. Our patent pending technology is offered to any type of employee, and money can be transferred instantly. DailyPay also offers the lowest and most transparent fees in the industry.
What market you are targeting and how big is it?
We work with mid-cap and enterprise companies. Our major industry verticals are call centers, healthcare, hospitality, retail and other services.
What’s your business model?
We charge a transfer fee between $1.25 and $2.99 per transfer.
We spoke to you in the summer of last year. How has the business changed since then?
In 2016, 1% of the American workforce had access to DailyPay. In 2017, that number grew to 5%. In just the past couple of months after Walmart announced their daily payment solution, demand for our solution has skyrocketed. We expect by 2020 that over half of the American workforce will be paid daily.
What was the funding process like?
Pretty much down the middle. Thankfully, we had fantastic insiders who were extremely supportive of the company. We were very selective in identifying new investors who believed in our long-term mission and importantly, our enterprise go-to-market strategy.
What are the biggest challenges that you faced while raising capital?
It’s more time consuming than you think and every good investor has their own specific questions they’d like answered.
What factors about your business led your investors to write the check?
Our team, our growth, and our mission.
What are the milestones you plan to achieve in the next six months?
We are looking to bring on Fortune 100 companies in the next 6 months. We have had tremendous success with mid cap and large private companies but our sights are set on public companies.
What advice can you offer companies in New York that do not have a fresh
injection of capital in the bank?
Product market fit is the most important thing to prove. Do that first. Also, do one thing really well.
Where do you see the company going now over the near term?
We’ll be hiring a bigger team to focus on expanding the number of partners that we work with. We also plan on providing more financial wellness content and initiatives.
What’s your favorite restaurant in the city?
I prefer to eat a home cooked meal at home. And if I have to meet someone out, then the Gee Whiz Diner in Tribeca.