Power Financial Wellness,a Kenyan based financial wellness startup has secured Sh376 million ($3 million) seed funding aimed at supporting expansion plans in Kenya and Zambia.
The funding round was led by DOB Equity, Bolt by QED Investors, Quona Capital, Zephyr Acorn and Norrksen Accelerator.
Founded in 2020 ,the fintech which has operations in Kenya and Zambia including offices in the United States and India, aims to help employees and gig workers improve their financial well-being by offering them access to short and long-term loans, investment opportunities and insurance products.
According to Power co-founder and CEO Brian Dempsey, the launch of Power was informed by the trends he noticed in the micro-lending space, and experience he got while working in the micro-finance sector.
He said ,“During my time at the micro-finance institutions I noticed that close to 65% of workers that banked with us would spend all of their money in the first five days of the month. And then they go on to access expensive microcredit from loan apps], which left them struggling from a financial health perspective,” said Dempsey, Power co-founder and CEO.
“This is what informed the launch of Power. We focus on helping workers access affordable and appropriate financial services,” he said.
The fintech partners with banks, lenders, asset managers and insurance underwriters to provide products to clients through its platform.
Currently the startup has on-boarded 75 companies in Kenya, giving it access to more than 40,000 workers, and so far it has been able to serve 15% and targets to reach 250 companies in Kenya.
“We integrate to their payment or payroll system allowing their workforce to download the Power app. We then conduct digital identity checks, and open up our four key services to them,” said Dempsey.
“Once we connect into a company, we already know how much the individuals are earning, how long they’ve worked there. We know whether they’re full-time, part-time contractors or gig workers. We connect into the credit bureau in real time to pull information on other facilities they might have in the market. And we use all that information to then provide a unique amount, interest rate and loan tenure for workers,” he said.
The company gives employees the ability to access a percent of their earnings in advance, and long-term loans on its balance sheet, based on their earnings, for 2-3% interest a month. Its platform also allows HR to access, approve or reject employee loan requests.
The startup also enables individuals to purchase insurance products, and make repayments over an extended period, which attracts the same interest, giving them access to packages by partner companies that require lump-sum payments.
In addition, those signing up for the investment service are introduced to money-market and pension funds, to which a pre-determined amount from their salaries is invested.
The startup now wants to scale to Zambia after signing a deal with a southern African bank .“In southern Africa, we have a bank partnership in Zambia, Malawi, Mozambique, Botswana and Zimbabwe. We’re starting in Zambia. And what we are trying to look for in our partners is a typical bank that is banking a lot of companies, corporates or SMEs but not really banking a lot of retail consumers but have strategic intent to expand their offering and grow their loan book and deposit-based savings,” Dempsey told Techcrunch
The startup will continue partnering with banks leveraging on technology to allow them to offer services to workers, and completely disrupt the market. Power is also eyeing expansion to at least 10 markets across the over the next three years.