Payday Mayday — salary finance thoughts & landscape

Maciek Gnutek
May 25, 2020 · 5 min read

Intro

A very limited number of investors I know enjoy writing content but many of them say they need to start writing to capitalize on research and heavy lifting they’re doing.

On the other hand, most of the investors are basically skimming through articles looking for either bullet points, quotes, or landscapes. I’m no different so let me introduce you to my Pareto approach to writing content — coming from an investor to investors, but founders might find it useful as well.

You’ll find a concise summary of my current research, a product of numerous conversations with founders, investors, corporates, and colleagues.

What’s more, I have invited 4 colleagues of mine, great investors from France, Germany, Austria, and Spain to add a few lines of comment. Thanks Nina, Bartek, Enrique, and Jordi — your input was invaluable!

Thoughts

As promised, without a longer introduction: here are promised bullets.

Market

  • The USA is 5–6 years ahead with market development.

That’s what Jordi from Kibo said about the market:

Problem

  • According to the Finder’s report (check it out) the problem exists. 3 out of 4 credit takers take more than 1 loan a year of an average £260 size with £100 being a single most popular size of a loan.

I have asked Enrique from Speedinvest what he thinks about the problem:

Product

  • There are companies that are basically advancing the salary: a worker can withdraw a proportion of worked salary (or a percentage of earned salary) and those that are providing payday loans. It’s called EWA — Earned Wage Access.

Nina from ProjectA shared her thoughts about the product:

Distribution

  • There are two predominant distribution models: (1) B2B2C → selling to enterprise and onboarding an end-user, (2) B2C → selling directly to end-users.

Is distribution that obvious? Below you can see what’s the opinion of Bartosz from Alven:

European landscape

All right, now let’s go to companies. I’m lazy so please don’t expect beautiful infographic (which in most cases are annoying because you can’t interact with them).

NOTE: During my research, I found out some companies raised recently but they decided to keep it undisclosed — respecting their decision I’ll not disclose it as well.

  • UK, France, and Spain are the main hubs where salary finance products occur.

You can access the comprehensive list of ~40 European and USA-based salary finance companies HERE.

If you’re running a company in this field and would like to be featured, please reach out directly or fill THIS FORM.

My opinion

To keep it short and simple:

  • This model works and is proven by a number of companies.

I hope some of you will find this research useful. In case of any questions don’t hesitate to hit me at maciej.gnutek@innovationnest.com.

Notes from Innovation Nest

Innovation Nest is a Early Stage VC firm that invest in…

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