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Fintech Earnd secures $2.5 million for tech putting a stop to payday lending woes

Stephanie Palmer-Derrien /

Earnd

Co-founders Serge Kotlyarov (far left) and Josh Vernon (second from right) with the Earnd team. Source: Supplied.

Sydney fintech Earnd has secured $2.5 million in funding to accelerate the rollout of its platform, which encourages financial wellbeing by giving employees access to their pay as they earn it.

The round includes investment from NAB Ventures, Pocketbook founders Alvin Singh and Bosco Tan, and BPAY chief John Banfield. NAB Ventures managing director Todd Forest has also joined Earnd’s board.

Founded in April last year by Josh Vernon and Serge Kotlyarov, the startup plugs into an employer’s systems and allows employees to request an advance on anything they have earned up until that point.

The borrowed funds are provided by Earnd, and when payday comes around, the loan balance is taken out of the employee’s earnings and paid back to the startup.

In the simplest terms, it’s a lending platform, Vernon tells StartupSmart. However, in this case, fees are paid by the employers, meaning the service provides a responsible alternative to high-interest payday lenders.

“In Australia, when you find yourself in a situation where you struggle between paychecks, your options are limited,” Vernon explains.

“You should be able to access your income as you earn it.”

It’s been up and running for almost a year, and Earnd now has “a couple of thousand” users, Vernon says.

Demand comes from businesses that tend to have high turnover, such as those in the retail space.

For these employers, a service like this increases loyalty, and “makes a big difference in improving their staff retention rates”.

But there has also been demand from corporates, Vernon says. For them, Earnd fits into the wider conversation about employee wellbeing.

Money is a leading cause of stress, he says. Earnd provides “an opportunity to begin a conversation around financial wellness”.

“They believe in the mission”

Earnd has a product working in the market, and now the founders are pushing to get it out to more people.

The funding will be used mainly for product development, Vernon says. While the founders are confident in their solution, “there’s a lot more we can do”, he explains.

The startup will be hiring developers, and sales and marketing people.

The founders have plans for another funding round in 18 to 24 months, and by that point, Earnd’s headcount will be “double at least”.

Vernon has a clear roadmap of where the company will go, he says.

“The opportunity now is to get it into the market for more individuals.”

Earnd is Vernon’s first business venture, which he left university to pursue full time. However, he also worked as an analyst at a VC firm for 18 months, where he picked up “a lot of the smarts”, he says.

Still, the founders were strategic about who they brought into the business.

John Banfield, for example, has an “incredible understanding of the payments space”, and NAB Ventures has been instrumental in helping them navigate the regulatory requirements.

“I feel extremely fortunate to be backed by the people we’re backed by,” Vernon says.

“They believe in the mission,” he adds.

“That makes a big, big difference.”

Vernon’s number one piece of advice for aspiring startup founders is to get an MVP into the hands of users as soon as possible, and react to feedback as you go along.

“When we first started, [Earnd] looked pretty different,” he says.

When it comes to raising capital, he advises founders to target VCs that are aligned with their startup. For example, NAB Ventures is focused on financial services products, and also on “helping vulnerable individuals get out of financial situations”, he says.

“If you’re able to find an investor where there is cultural alignment, a lot of the difficulty is removed.”

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Stephanie Palmer-Derrien

Stephanie Palmer-Derrien is the editor at StartupSmart. You can contact her at [email protected].

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