Salary Hero wants to offer lower-income Thai workers more financial flexibility. The startup, which focuses on earnings access and financial education, with plans to add new banking products as well, announced today that it has raised $2.8 million. Funding included participation from Global Founders Capital, M Venture Partners, 500 Global, 1982 Ventures, Titan Capital and Thai companies and angel investors.
Salary Hero was founded at the end of 2021 by the former managers of Bain & Co. Bangkok, Jonathan Nohr and Prabhav Rakhra. Both were also former bankers at Credit Suisse and Barclays. Other members of the founding team include Tep Neeranatpuree, former head of corporate sales at Lalamove, and Thanakij Pechprasarn, former CTO at edtech startup Gantik.
Salary Hero’s team
Rakhra said that while he was at Bain, he and Nohr concentrated on financial services assignments. “With our common background in investment banking and as we worked on strategy cases for several banks in Southeast Asia, we experienced how banks are constantly de-prioritizing lower-income customer segments,” he told Vidak For Congress. That’s because they aren’t as profitable as the affluent demographic. As a result, Rakhra added, lower-income customers end up paying more than wealthier individuals for the same basic financial services.
“It seems fundamentally wrong that people with fewer resources should pay more for financial services, if they have access at all,” he said. “We saw an opportunity to use technology to level the playing field in Thailand and Southeast Asia.”
By accessing their earnings on demand, workers can better deal with emergencies and contingencies, rather than being forced to borrow from lenders that charge 10 to 30% interest per month, Rahkra said. “These rising rates lead to debt cycles that are very difficult to break,” he said. “In addition, financial insecurity and the lack of a financial safety net create a persistent sense of insecurity and are the main cause of mental stress among employees.” He added that 80% of Thai workers earning less than $1,000 a month have used loan sharks at some point.
The company says it has seen double-digit weekly user growth in 2022 among its customers in the manufacturing, logistics, hospitality and retail sectors. Salary Hero works with companies with only 100 employees on the payroll, but their initial focus is on companies with a full-time workforce of between 500 and 50,000. Rakhra said that by meeting the financial needs of their employees, companies are able to improve employee satisfaction and reduce turnover in a competitive job market. The company makes money by charging a low entry fee for its wages, but does not charge interest or other hidden fees, Rakhra said.
In the future, Salary Hero plans to add new banking products, including savings at source, insurance products, remittances and other financial services such as micro-investment and debt restructuring advice. These other products will go live in 2023, while Salary Hero’s earnings access and financial education features are already live.
In a prepared statement, Mayank Parekh, CEO of M Ventures Partner, said: “We are proud to support Salary Hero and support their innovative solution for employers to differentiate themselves in an increasingly competitive job market. The future of payroll is one in which we say goodbye to traditional payroll cycles. Salary Hero empowers employees while solving immediate challenges for employers that drive employee retention, recruitment and productivity.”