SAN JOSE, Calif.–PayActiv, the largest provider of employment-based holistic financial wellness services, has raised $20 million from Generation Partners in a Series B financing round. Generation Partners has joined early round investors Ziegler Link•Age Fund II and affiliate funds of Softbank Capital in helping PayActiv end predatory fees and debt cycle for millions of workers.
This latest funding round comes at a time when PayActiv is promoting its mobile and global holistic financial wellness tools, including bill pay, budgeting & savings tools, discounts, financial counseling & education, and multiple instant funds availability options for immediate access to earned wages.
“Working with numerous companies across the country, we have seen that employers who offer timely access to earned wages through PayActiv not only help their employees reduce financial stress with security, dignity and savings, but also realize concrete benefits to their bottom line,” said Safwan Shah, founder and CEO of PayActiv. A landmark research paper released by Todd Baker at the Harvard Kennedy School found that the PayActiv approach to financial wellness could save US businesses hundreds of millions of dollars each year through enhanced employee retention. Deployment of PayActiv can also bring additional savings from increased productivity as well as more subjective ROIs in strong recruitment and employee morale.
Most hourly workers in the United States live paycheck-to-paycheck, and according to the Federal Reserve, more than 100 million people do not have $400 in savings to weather even a small financial emergency. When money gets tight, some workers overdraft their checking accounts or don’t pay their credit card bills, incurring exorbitant fees and late charges. Some people resort to using high-cost payday loans. The CFSI estimates that financially-strapped workers pay more than $150 billion annually for these alternative financial services.
“Generation Partners is leading the Series B funding because we see in PayActiv the potential to positively change the lives of millions of workers, while also growing a profitable and successful business,” said Mark Jennings, Managing Partner at Generation Partners. “We founded Generation in 1995 to focus on companies with strong growth drivers and the potential to transform industries. Generation Partners has a long and successful history of backing companies that marry good social purpose with exceptional business models, so PayActiv is a perfect fit for our firm.”
“PayActiv has created a massive positive impact on the relationship between employees and employers,” said John Hawkins, Managing Partner at Generation Partners. “Already, they are settling more than $100 million in earned wage access transactions each month, and the company estimates that employees are avoiding an estimated $10 million each month in eliminated late charges, overdraft fees and interest charges. At the same time, businesses are reaping the benefits in better employee recruitment and retention. PayActiv is truly ‘win-win’ for employers and employees.”
John Hopper, Chief Investment Officer of Ziegler Link•Age Fund II, said, “It is an honor to be able to invest in a company like PayActiv. We look forward to helping this much-needed solution expand within healthcare and our various areas of expertise. We believe that PayActiv not only represents a great investment opportunity, but also they are a critical service for the millions of employees who are currently paid on an hourly basis.”
Founded in 2012, PayActiv has grown six-fold in the past year. In December 2017, PayActiv signed an agreement with Walmart to deliver timely earned wage access to more than 1.4 million associates. In July 2018, the company announced an agreement with ADP that opens the PayActiv services to more than 600,000 businesses nationwide.
PayActiv will use this funding to expand its platform, accelerate growth and focus on developing additional high-impact solutions to the financial problems impacting billions of workers worldwide. Additionally, Hawkins will join the PayActiv Board of Directors to further propel the company’s goal of transforming the relationship between employer and employee and creating security, dignity and savings for all workers.
“John will be a vital part of our Board, and we welcome his leadership to help PayActiv continue its rapid growth,” Shah said. “We are only in the first phase of delivering employer-based financial wellness solutions, and our investors and partners have provided us the foundation to give hope to millions of workers who are striving to reach their goals.”