Summary:
Rain raises $75 million in Series B funding led by Prosus.
35% of U.S. households below $50,000 income live paycheck to paycheck.
EWA platform allows early wage access, helping avoid high-interest loans.
Plans to launch EWA-secured credit cards and savings products.
Focus on financial wellness aims to help users save more and rely less on EWA.
Rain Raises $75 Million in Series B Funding
Rain, a groundbreaking fintech startup based in Los Angeles, has successfully secured $75 million in an all-equity Series B funding round. This funding was led by Prosus, bringing the company's post-money valuation to $340 million. Rain's mission is to enhance employee financial wellness through its earned wage access (EWA) app, which offers features like overdraft alerts and spending trends.
Addressing Financial Struggles
A recent report by Bank of America highlights that approximately 35% of U.S. households with an income below $50,000 are living paycheck to paycheck, a rise from 32% in 2019. Rain's EWA platform provides a solution, allowing employees to access a portion of their wages early for a nominal fee, thereby helping them avoid the pitfalls of high-interest payday loans.
Unique Features and Expansion Plans
Rain differentiates itself by integrating with major payroll and timekeeping systems, making it easy for employers to onboard the service with minimal manual effort. The startup has already onboarded over 2.5 million employees and has distributed more than $2 billion in earned wages. Rain targets mid-market and enterprise customers with over 300 employees and charges a modest fee for transactions.
In addition to EWA, Rain is expanding its offerings to include credit cards, savings products, and a financial education portal. With the new funding, the startup plans to launch an EWA-secured credit card with a dynamic credit limit based on verified earned wages and a product to simplify the use of Health Savings Accounts (HSAs).
A Bright Future for Fintech
The funding comes at a time when the fintech landscape is stabilizing after a period of slow growth, with a 45% decline in global fintech funding year-over-year. However, Rain's innovative approach and comprehensive platform for financial wellness position it for success in this evolving market. Bradford emphasizes that their goal is to help users rely less on EWA as they build savings, fostering a path to financial freedom.
Funding and Growth
Rain's recent funding round attracted participation from Nextalia Ventures, Spark Growth Ventures, and existing investors like QED and Invus Opportunities. The startup, which currently employs 175 people, is focusing on scaling its market presence through enhanced sales and marketing efforts.
In 2023, Rain previously raised a $116 million Series A round, showcasing its rapid growth trajectory in the fintech space.
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