Regn raises $116 million to give workers flexible access to pay

US-based fintech Rain has raised $116 million in Series A funding, which it believes is the largest fundraising of its kind for any HIR tech company.

The Rain platform gives hourly workers better access to their money, allowing them to access their pay after each shift. As is becoming the norm for these types of platforms, it is offered for free to employers who then provide it as an optional benefit to employees. Employees pay a small fee similar to an ATM fee each time they withdraw earned wages, and to prevent irresponsible use, employees can never withdraw more than 50% of their gross earned wages in any pay period.

It’s part of a growing movement of ‘flexible pay’ fintechs looking to break apart traditional notions of pay and monthly pay cycles. Software company Ceridian offers a similar feature called Dayforce Wallet, which it expanded to the UK in November. Platforms that facilitate “earned salary access” provide greater flexibility to employees, helping them manage day-to-day expenses or settle unexpected bills.

It is particularly useful for hourly rate workers; Rain’s corporate partners already include hotel chains such as Hilton and Marriott as well as fast food chains McDonald’s, Burger King and Taco Bell.

The latest financing includes $66 million in equity financing and an additional $50 million in debt financing. Investments come from QED Investors and Invus Opportunities along with WndrCo, Tribe Capital and DreamersVC. The debt facility was arranged by Sound Point Capital Management.

Rain saves low-wage workers from payday lenders

Alex Bradford, CEO and co-founder of Rain, says: “We built Rain to empower people, especially hourly workers, to take control of their finances and eliminate the need for predatory lending. With this investment, we will continue to improve our platform and deliver a powerful employee benefit that improves individual financial well-being and boosts morale while providing employers with a valuable tool to recruit and retain workers in a tight labor market.”

Rain says low-wage workers have endured “significant economic challenges” in recent years — from the COVID-19 pandemic to the current economic downturn and cost-of-living pressures. Between payday loans, credit card interest, overdraft fees and other penalties, Americans spend $170 billion a year waiting for their next paycheck.

“Half of America cannot access affordable, transparent financial services products,” said Nigel Morris, Managing Partner and Co-Founder of QED Investors. “This results in unnecessary stress, anxiety and hardship for millions of people. Companies like Rain are helping to level the playing field by giving hourly workers the ability to access the money they earn faster, giving them peace of mind, saving them millions in fees and improve their overall financial health.”

This funding milestone follows an active period of growth for Rain. Rain launched its Instant Pay app in early 2020 and has grown its user and customer base by over 20% per month for the past 30 months. To date, Rain has paid out over $150 million in earned wages to users and has helped them save tens of millions in predatory fees.