Rain Raises $75M Series B Funding - Fintech News

Rain Secures $75 Million in Series B Funding

Rain, a company specializing in employer-integrated earned wage access (EWA), has successfully completed a $75 million Series B funding round comprised entirely of equity.

Funding Details and Future Plans

Prosus spearheaded the investment, resulting in a post-money valuation of $340 million for Rain. The newly acquired capital will be strategically allocated to expand Rain’s product offerings.

Specifically, the company intends to introduce credit card and savings products, as confirmed by co-founder and CEO Alex Bradford in an exclusive statement to TechCrunch.

Financial Precarity and the Rise of EWA

A recent Bank of America report (PDF) highlights a growing trend of financial instability in the U.S. Approximately 35% of households earning less than $50,000 annually are currently living paycheck to paycheck, a rise from 32% in 2019.

This situation is prevalent across various age groups and geographic locations, with the South exhibiting the highest concentration of paycheck-to-paycheck households. The timing of biweekly paychecks often doesn't align with monthly bill due dates, creating financial strain.

Earned Wage Access (EWA) platforms offer a solution by allowing employees to access a portion of their earned wages before their scheduled payday, often with a modest fee.

These platforms can represent a more responsible alternative to options like high-interest payday loans.

Rain’s Differentiators and Employer Integration

Rain distinguishes itself through its focus on automation and seamless integration with employer systems. The company aims to attract businesses seeking to support their employees’ financial well-being.

“Our connectivity to major payroll and timekeeping systems, coupled with automated onboarding tools, minimizes manual effort for employers,” Bradford explained. “Once implemented, the system requires minimal ongoing maintenance.”

Founded in 2019 and based in Los Angeles, Rain has already onboarded over 2.5 million employees and facilitated the distribution of over $2 billion in earned wages.

Target Market and Transaction Fees

Rain primarily targets mid-market and enterprise clients with over 300 employees. Instant transactions incur a fee comparable to ATM fees, averaging around $3.

Employees also have the option of utilizing a free ACH transfer, which processes within one business day.

Beyond EWA: A Holistic Financial Wellness Approach

Rain’s vision extends beyond simply providing EWA. The company offers a comprehensive suite of financial wellness resources.

These include a financial education portal, personalized financial coaching, and a free tax filing and refund service through a partnership with april, a taxation solution provider.

Bradford notes that these supplementary services drive 70% of the platform’s monthly adoption, with EWA accounting for the remaining 30%.

“Our ultimate goal is to empower users to rely less on EWA as they develop stronger saving habits,” Bradford stated.

Series B Participants and Expansion Strategy

The Series B funding round included participation from Nextalia Ventures, Spark Growth Ventures, and existing investors such as QED and Invus Opportunities.

New Product Launches

In the third quarter of this year, Rain plans to launch an EWA-secured credit card featuring a dynamic credit limit based on verified earned wages.

Later in the year, the company will introduce a product designed to simplify Health Savings Account (HSA) spending, allowing employees to use any card and receive reimbursement. Additionally, new savings accounts with auto-save features and rewards will be launched.

Fintech Landscape and Regulatory Considerations

Rain’s funding arrives during a period of renewed optimism within the fintech sector, following a period of relatively stagnant growth.

While funding in global fintech companies decreased by 45% year-over-year to $50 billion in 2023, the average deal size has increased by 20% to $21.94 million in 2024.

Venture funding in the EWA space specifically grew 19% year-over-year to $569 million in 2023.

The company’s employer-integrated approach differentiates it from employee-facing EWA platforms like Earnin, which have recently faced regulatory scrutiny regarding potentially predatory lending practices.

“Our commitment to building a comprehensive financial wellness platform will help us achieve our mission of empowering millions to achieve financial freedom,” Bradford concluded.

Scaling Operations

With a team of 175 employees, Rain is actively expanding its go-to-market strategy through investments in sales, sales enablement, marketing, and channel partnerships. Further investment in employer-facing tooling is also planned.

In 2023, Rain secured a $116 million Series A funding round, consisting of $66 million in equity and $50 million in debt.