Technology startup, SmartWage, raises $2M in oversubscribed funding round
SmartWage, the HR and communications technology startup, has raised USD$2 million (R29m). The oversubscribed seed funding round was raised to support SmartWage’s vision of transforming Africa’s workforce through digital inclusion, particularly for frontline employees like cashiers, restaurant staff, security personnel, and healthcare workers.
SmartWage is giving enterprises a simple yet effective way to digitise their most time-consuming HR processes, helping them save time and money in order to focus on what matters most – people. The product gives employees without email the ability to receive company-wide communication, access their payslips, request leave and get access to financial wellness products, all via WhatsApp.
90 percent of frontline employees don’t have or don’t use email, while 97 percent of formally employed people in South Africa use WhatsApp. In a country where most people have less than five apps on their phone, engagement is best when using an existing distribution channel like WhatsApp to reach employees.
SmartWage CEO, Simon Ellis, says that no solution adequately addresses the challenge of communicating with a distributed workforce, leaving employers unable to digitally transform. “There is a communication gap. Frontline employees don’t feel part of a company’s brand and its promise. Payslips and leave are still done manually with paper printouts, while employee communication is done using notice boards or apps, which have huge usage drop-offs. Onboarding and disciplinary procedures are still paper-based, costing businesses precious time, money and resources”.
But it’s not only about driving efficiencies for employers. SmartWage has developed a host of financial wellness products that give employees the financial lifeline they need. These include access to free financial education and on-demand pay. “We have learnt through our process that employees need access to cash more than ever before. 80% of South Africans struggle to make it to the end of the month without relying on some form of short term debt, and the payday loan industry is booming” says Ellis.
Ellis goes on to say “If we can save employers time and money through digitisation, we can bridge the gap between South African enterprises and their frontline employees, helping enterprises connect clearly and dynamically with their employees, whilst offering financial wellness tools at the same time. By offering tools that benefit both employers and employees, we have a powerful value proposition”
SmartWage was founded in May 2020 by Simon Ellis and Caroline van der Merwe. Van der Merwe, an expert in the field with almost a decade of experience managing employer benefit programs, says existing software like SAGE, SimplePay, Workday and Oracle has been built for those with email, smartphones and computers, which makes communicating and providing necessary HR services to frontline employees a real challenge. She goes on to explain “What we see day in and day out is that most large companies that employ frontline employees haven’t found a viable way to digitally engage and communicate with their employees, which also means that HR is still largely paper-based and cumbersome”.
The seed funding was accessed via several influential investors. One of those investors is Idris Bello, founding partner of LoftyInc Capital, a pan-African VC fund headquartered in Nigeria, and an early investor in Flutterwave and Andela, two of Africa’s tech unicorns. Bello said he was excited by the scalability of the SmartWage product set and the impact it could have, in both Africa and beyond the continent. “The team at SmartWage are innovators – they’re building more than just an earned wage access product, and have recognised that in order to make a tangible impact on employers, they need to build a powerful way for employers to engage with their workforce. We are excited to partner with Simon, Caroline and the powerful team they’ve assembled to support SmartWage’s mission to drive digital inclusion across Africa”.
Other investors include Creator Collective Capital, Penrose Capital, along with angels from Naspers, Dimension Data, Investec, and Standard Bank. SmartWage plans to deploy the capital to expand its product and technology team and double down on solving employers’ biggest problems.
SmartWage clients include companies that employ frontline employees, typically in retail, quick service restaurants (QSR), manufacturing, construction, and hospitality. They have grown their monthly active user base 14x in the past 12 months, and now work with brands such as Edgars, KFC, Debonairs, Seattle Coffee, Truda and Twizza.