In a move strengthening its financial technology (fintech) portfolio, Naspers’s SA-focused venture arm has invested R15m in a Cape Town-based start-up that gives employees instant access to their earnings instead of having to wait for the end of the month.
The company’s Foundry unit backed Floatpays, which provides customers with real-time access to a portion of their “earned but not yet paid” income during the month, with a $1m (R15.15m) investment, Naspers said on Tuesday.
Naspers Foundry is the group’s SA-focused R1.4bn early-stage tech investment fund.
Founded in 2019, Floatpays integrates into a company’s payroll system. Employees can access the platform using a mobile app or USSD (Unstructured Supplementary Service Data) to withdraw from their yet-to-be-paid income. Employees are charged a transaction fee when making a withdrawal.
The company says having access to incomes before payday can help reduce the need for getting expensive personal loans or turning to loan sharks, when people are in need of cash or have unplanned expenses to cover.
The business appears to be using early income access as an entry point to offer other financial services to customers.
“Floatpays provides much-needed access to funds to ordinary people and a growing suite of other financial services, fostering a more productive and healthier workforce with greater financial security,” said Simon Ward, founder and CEO of Floatpays.
The business is based on similar business models in the UK, such as Wagestream, which works with employers to let employees draw down a percentage of their income in the month for a flat fee. The business model has been gaining traction, with Wagestream having raised $80m to date.
Local companies such as SmartWage are also playing in the same market.
Fabian Whate, head of Naspers Foundry, said: “On-demand earned wage access is fast-growing within the fintech sector. While still nascent in SA, there is significant potential for Floatpays, which is focused on serving the underbanked. We’re delighted to partner with the Floatpays team, who have a proven track record of success in early-stage tech businesses, particularly in fintech.”
This investment in Floatpays is the venture unit’s smallest to date and marks Foundry’s ninth since its inception.
In 2019, Naspers backed Aisha Pandor’s online home cleaning services business SweepSouth with R30m. In August, the unit made its largest investment of R120m into online insurance company Naked Insurance.
As a group, Naspers has focused mainly on food delivery, fintech and classifieds, but is now investing more in education as a new area of growth, driven by increased online demand due to Covid-19.
Its international unit Prosus — which has large investments in companies such as China’s Tencent, Brazil’s iFood and Germany’s Delivery Hero — entered the edtech market in 2016. The group’s main edtech units include Brainly, Codecademy, Eruditus, SoloLearn and Udemy.
Most recently, Foundry put down R54m to back Planet42, a local technology platform that helps people without bank or access to credit, to buy and rent vehicles for everyday use.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.