Activehours, a direct-to-consumer startup that lets hourly wage earners name their paydays, announced it has raised $22 million of funding.
The round was led by Matrix Partners. March Capital Partners also participated, as did existing investors including Ribbit Capital and Felicis Ventures.
The firm, based in Palo Alto, Calif., said in a release that it would use the funds to increase its team and improve its product.
Hourly wage earners — ranging from Uber drivers to bank employees — request portions of their paycheck through the Activehours mobile app. The app represents part of a trend of startups letting consumers – who could easily work odd hours – name their payday in order to avoid overdraft fees, payday loans and late fees.
"With today's technology, we can actually pay people faster than daily," said Ram Palaniappan, founder of Activehours, in a release. "Think about it. When you shop, you pay at once. When you go out to eat, you pay at once. But when you work, you wait two weeks to get paid. Activehours is a better way to get paid, and people are taking notice."
Instead of charging people for the service, Activehours earns money based on what a user tips the company. The tipping model is rare in fintech with a few exceptions, including Aspiration.
FlexWage, Clearbanc, Even and Payactiv are among the firms working to disrupt payroll for hourly paid workers or contractors.
Activehours is only available to users who receive their paycheck via direct deposit to a checking account.