Spanish salary advance startup Payflow has raised $9.1 million in a Series A funding round co-led by Seaya Ventures and Cathay Innovation through its C. Entrepreneur Fund. The round also saw participation from Y Combinator, Force Over Mass Capital and Rebel Fund.
The new funding round of $9.1 million brings the total funds raised by the fintech company to $13.6 million.
Founded in January 2020 and based in Barcelona, Spain, Payflow is a YC-backed salary advance fintech platform that sells salary-advance services to employers of labour to offer their employees. Instead of charging a fee on employees that want the salary advance option, Payfloe charges companies a commission for its technology and according to the startup, this both differentiates it and has helped win the hearts of companies, labour unions, etc.
According to Avinash Sukhwani, a co-founder of the platform, “We differentiate from other pay-on-demand companies because we have never charged an employee for using the service (we are the first true employee benefit, fully paid by the company)” adding that “We cater to all industries, from restaurants to startups to hospitals, but uptake is best amongst blue-collar workers”.
Benoît Menardo added that Payflow “is free for users and it will always be the case. Our vision is to provide the first true employee benefit for blue-collar workers and we believe that if the employee has to pay for it, it’s not a real perk”.
Payflow is helping employees run out of loans and their “deadly” interests. There are times when an unforeseen circumstance may come up and workers will need access to fund. Some have no choice but to turn to loans, while others that have access to a salary advance may not be able to request it multiple times.
While Payflow gives multiple access to salary advances, the platform has a safety limit that’ll allow people to restrict their usage. According to Benoît Menardo, “Most companies set this limit to around 50 percent so that employees always receive at least the remaining 50 percent of their salary in the monthly paycheck. That allows them to ensure there is enough left over for rent and other essential monthly expenses”.
Payflow plans on expanding beyond Spanish borders into Europe and Latin America, and thanks to the new fund, that will be possible. The company is also planning to evolve into a neobank and its salary advance feature will be one out of many financial features it’ll offer.