By Jean de Fougerolles, Managing Partner
Please welcome SteadyPay, an income smoothing app for the modern economy
SteadyPay is one of the latest additions to the Fair By Design Fund portfolio. We invested just before COVID-19 hit so their services will be needed more than ever by gig economy workers to smooth income, create financial security, and avoid high credit lenders.
HQ: London, UK
The problem: SteadyPay is focused on building the financial resilience of gig economy workers, approximately 12-20 million workers in the UK and the fastest-growing employment sector. Some of the challenges for this target market include:
- Not being able to access fairly priced financial products as a result of the perceived higher risk of income volatility.
- Without the ability to plan, one can become ‘passive’ towards finances and less focused on choosing the ‘cheaper’ option for various services. This subsequently leads to problems for both workers and employers/clients.
- The lack of income stability has a significant impact on the psychology of how one manages money (i.e. why plan for the future when we are unable to predict cash flows short term?), often making short and medium-term saving goals an afterthought.
The impact that personal cash flow ‘instability’ has on mindset and overall financial ‘wellness’ cannot be underestimated.
The solution: SteadyPay addresses volatile pay faced by the gig economy, freelancers and self-employed individuals. Their proposition provides the following solutions:
- SteadyPay offers predictability through a subscription-based app that automatically tops up workers’ bank accounts when their earnings are below average and allows customers to repay through interest-free instalments. This enables users to budget more easily on a monthly basis.
- Its decision engine is tailored utilising Open Banking and a proprietary credit decision algorithm to better assess the creditworthiness of gig-economy workers, often excluded by traditional credit providers.
- It helps with volatile cash flows – income stability is required for gig economy workers to access fairly priced financial products in the UK. Essentially, this falls under ‘pay smoothing’ which prevents pay volatility and prevents financial stress.
- It is a financially inclusive tool as gig economy workers tend to not have the same benefits as employed staff, such as sick or holiday pay. The tool allows personal costs to be covered within those circumstances, should they be needed.
Why we’re backing SteadyPay: Not only has SteadyPay realised and implemented a user-centric tool which facilitates gig economy workers, but it is putting structures in place for one of the biggest markets globally. Employers and clients have continued to ignore the job and project security required for autonomous and remote professionals. SteadyPay strengthens the financial resilience of individuals and communities for the ever-growing gig economy.
- At Seed-stage it is all about the team: The SteadyPay team inspired us with its solution-driven mindset and iterative approach to product development, based on user feedback.
- Value creation through their decision engine: SteadyPay’s risk engine accurately assesses the risk profile of customers supported by Open Banking. This is key to balancing out the volume of people onboarded vs minimising the costs associated with additional defaults.
- Impact thesis: Making sure gig economy workers become more resilient to shocks and can avoid high-cost credit is a key objective of the Fair By Design Fund. The payday loan market has illustrated how lending to people who can’t sustain debt drastically worsens their situation. SteadyPay’s team is very much focused on providing a service to alleviate stress, plan further and improve financial wellness responsibly.
We are excited to add SteadyPay to the Ascension Ventures’ Fair By Design Fund portfolio alongside other financial inclusion and fair credit businesses like Wagestream (income smoothing through an employer), incuto (infrastructure for Credit Unions to compete with payday lenders) and Credit Kudos (enabling fairer credit scoring).
In the Press: “SteadyPay closes £2.9m equity and debt funding” via UKTN