Nigerian fintech startup, Earnipay, has raised $4 million in seed funding to provide salary solutions to employees.
The seed round was led by venture capital firm Canaan, with participation from XYZ Ventures, Voltron Capital, Ventures Platform, and Paystack CEO Shola Akinlade.
Earnipay is a fintech solution that offers a start to financial wellness to employees by allowing income-earners to access flexible on-demand salaries. In addition, Earnipay will enable employers to provide employees with access to their earnings instantly at any time, without changing their existing payment process.
Earnipay taps into this vast market opportunity for on-demand salary access in Africa, as over 40% of the workforce receives monthly payments, making earners live off paycheck to paycheck. However, it further causes employees to run into a debt cycle as they take up loans or salary advances to balance out daily expenses and emergencies.
By partnering with employers, Earnipay integrates business payroll systems to offer services to employees where they can easily track and withdraw their accrued salaries via the platform at no interest charge. Businesses then reimburse Earnipay at the end of the month. But for others that cannot afford to, Earnipay sets up a reconciliation account on top of an employee’s salary account with scheduled automatic reimbursements. In addition, employers and businesses can set limits for percentages employees can withdraw each month.
Businesses can increase productivity as financial stress on employees is eliminated, with employees having control over their plans.
Earnipay makes profits from charging employees for having access to their salary early. For withdrawals between $4 to $20, it demands a $0.5 fee, while for amounts higher than $20, but less than $100, it charges $1.
Founder and CEO Nonso Onwuzulike launched the platform this January, though it has been in beta testing since September 2021, with Busayo Oyetunji joining as COO and Joshua Ajayi as CTO. Since beginning operations, the platform has served over 20 businesses, outsourcing firms, and HR solution providers in Nigeria. Its client base includes tech-enabled platforms Eden Life and Thrive Agric.
With the seed funding, the company intends to scale and accelerate the platform to help more employees make better financial decisions and improve living standards.
Canaan is a U.S based early-stage VC firm that invests in innovative startups with transformative ideas. Commenting on the funding round with Earnipay, Brendan Dickinson, the general partner at Canaan, said, “We’ve seen earned wage access multiply in many markets and believe it’s a natural fit in Africa. Earnipay has quickly established itself with a product built specifically for the payroll behaviors of this region, and early employer uptake is robust. Nonso has built one of the strongest teams that we’ve met on the entire continent, and we’re thrilled for the opportunity to partner with them.”