Democratizing Earned Wage Access
October 09, 2020Oct 09, 2020 | By Aditi Maliwal

80% of workers in America live paycheck to paycheck. The pandemic has brought on a surge in unemployment, and hourly workers have struggled to cover daily costs let alone emergency costs - nearly 40% of Americans said they would struggle to cover an unexpected $250 expense should they need to. They often need to take out high-interest payday loans that trap them in a vicious debt cycle, because there are simply no good alternatives for keeping their families fed, clothed, and cared for. This situation is even harder for those of the 82 million hourly workers and 57 million gig workers who are often underbanked and don’t have access to credit or other services.

Financial inclusion is a huge problem for a large percentage of the country, yet so many of the financial products available focus primarily on high-earners and high-net worth individuals. Not only does this feel unfair - it leads to enormous white space in the market.

I met Nico, Alex and Erich, the co-founders of Clair, on a video call at 8am on March 13th. I was sitting in my soon-to-be home office, with the world shutting down around us. The urgency behind Clair’s mission - to reduce the liquidity gap in the lives of hourly workers - was more palpable than ever. Within the first five minutes of the call, I knew that we were aligned and that Upfront needed to make this investment.

Make way for Clair, providing financial stability for hourly workers

At its core, Clair’s value proposition is very simple: convenient low cost financial services for hourly workers who primarily manage their money through cash and checks. Clair is an embedded FinTech company that partners with payroll, time systems, and gig platforms, allowing American workers to get access to their earnings, as soon as they finish the workday, for free. Employees get their earnings on FDIC-insured accounts with no high or hidden fees, and free cash withdrawals at 55,000 ATMs. In return, Clair’s partners get an API to integrate an “InstaPay” feature without having to build an entire digital bank or other fairly complex features such as wage-advance regulatory compliance programs, wage-advance algorithms and repayment mechanisms or manage the fundraising and operational complexities of a warehouse credit line, among many other things. Clair handles it instead!

Clair is also building a suite of tools for their users with the aim of increasing financial literacy and nudging its users to save. Today, Clair users are able to set automatic reminders to put money aside, and the company has several more savings features in its pipeline. More to come on this in the near future!

Winning through distribution

The annual turnover in labor intensive industries is very high, and large organizations such as Target, Walmart and Amazon offer a wide variety of employee benefits from tuition assistance programs to paid parental leave. A 2019 report showed that 65% of skilled gig workers would consider switching to a platform that paid faster, while 85% said they would work more often if they were paid faster. Why not offer instant payment services in order to retain talent?

Clair has seized on this trend for distribution by working with employers - embedding its financial services within workforce management, payroll processes, and gig platforms. Clair offers both a set of turnkey products as well as APIs, which allow these partners to set up instant payments for their end users in a matter of days. A seamless onboarding experience has brought so much joy to the partners and the end users (But don’t just take my word for it - watch this to hear more from their users!)

The right team at the right time

Though Clair’s product integrates with businesses, I am constantly struck by how obsessed the team is with their end user. The team lives the mission every day; they meet users in their place of work to conduct interviews and get feedback (from restaurants to grocery stores and ride shares) and use these inputs and data to drive every product decision they make. They live by the mantra of “give users early access to earned wages and provide them with financial stability such that they don’t need to live paycheck to paycheck anymore”. Nico, Alex and Erich are the perfect blend of methodical and empathetic. They made it a no-brainer for our entire partnership to take a bet on them, even with the investment process being fully-remote at the beginning of the pandemic

I’m excited to lead Clair’s $4.5M Seed financing and to partner with Founder Collective, Walkabout Ventures, and an esteemed group of angels that includes former Venmo COO Michael Vaughan and Seamless Founder Paul Appelbaum.

Join us - we are hiring!

Aditi is Upfront's SF-based partner but is still #LongLA. She invests in workflow automation platforms and fintech businesses, always looking for customer-obsessed founders and companies.

80% of workers in America live paycheck to paycheck. The pandemic has brought on a surge in unemployment, and hourly workers have struggled to cover daily costs let alone emergency costs - nearly 40% of Americans said they would struggle to cover an unexpected $250 expense should they need to. They often need to take out high-interest payday loans that trap them in a vicious debt cycle, because there are simply no good alternatives for keeping their families fed, clothed, and cared for. This situation is even harder for those of the 82 million hourly workers and 57 million gig workers who are often underbanked and don’t have access to credit or other services.

Financial inclusion is a huge problem for a large percentage of the country, yet so many of the financial products available focus primarily on high-earners and high-net worth individuals. Not only does this feel unfair - it leads to enormous white space in the market.

I met Nico, Alex and Erich, the co-founders of Clair, on a video call at 8am on March 13th. I was sitting in my soon-to-be home office, with the world shutting down around us. The urgency behind Clair’s mission - to reduce the liquidity gap in the lives of hourly workers - was more palpable than ever. Within the first five minutes of the call, I knew that we were aligned and that Upfront needed to make this investment.

Make way for Clair, providing financial stability for hourly workers

At its core, Clair’s value proposition is very simple: convenient low cost financial services for hourly workers who primarily manage their money through cash and checks. Clair is an embedded FinTech company that partners with payroll, time systems, and gig platforms, allowing American workers to get access to their earnings, as soon as they finish the workday, for free. Employees get their earnings on FDIC-insured accounts with no high or hidden fees, and free cash withdrawals at 55,000 ATMs. In return, Clair’s partners get an API to integrate an “InstaPay” feature without having to build an entire digital bank or other fairly complex features such as wage-advance regulatory compliance programs, wage-advance algorithms and repayment mechanisms or manage the fundraising and operational complexities of a warehouse credit line, among many other things. Clair handles it instead!

Clair is also building a suite of tools for their users with the aim of increasing financial literacy and nudging its users to save. Today, Clair users are able to set automatic reminders to put money aside, and the company has several more savings features in its pipeline. More to come on this in the near future!

Winning through distribution

The annual turnover in labor intensive industries is very high, and large organizations such as Target, Walmart and Amazon offer a wide variety of employee benefits from tuition assistance programs to paid parental leave. A 2019 report showed that 65% of skilled gig workers would consider switching to a platform that paid faster, while 85% said they would work more often if they were paid faster. Why not offer instant payment services in order to retain talent?

Clair has seized on this trend for distribution by working with employers - embedding its financial services within workforce management, payroll processes, and gig platforms. Clair offers both a set of turnkey products as well as APIs, which allow these partners to set up instant payments for their end users in a matter of days. A seamless onboarding experience has brought so much joy to the partners and the end users (But don’t just take my word for it - watch this to hear more from their users!)

The right team at the right time

Though Clair’s product integrates with businesses, I am constantly struck by how obsessed the team is with their end user. The team lives the mission every day; they meet users in their place of work to conduct interviews and get feedback (from restaurants to grocery stores and ride shares) and use these inputs and data to drive every product decision they make. They live by the mantra of “give users early access to earned wages and provide them with financial stability such that they don’t need to live paycheck to paycheck anymore”. Nico, Alex and Erich are the perfect blend of methodical and empathetic. They made it a no-brainer for our entire partnership to take a bet on them, even with the investment process being fully-remote at the beginning of the pandemic

I’m excited to lead Clair’s $4.5M Seed financing and to partner with Founder Collective, Walkabout Ventures, and an esteemed group of angels that includes former Venmo COO Michael Vaughan and Seamless Founder Paul Appelbaum.

Join us - we are hiring!