SA HR startup SmartWage completes $2m seed round

SmartWage, an HR and communications technology business based in South Africa, has acquired US$2 million in a preliminary fundraising round that was oversubscribed to support its ambition of transforming Africa’s workforce through digital inclusion, particularly for frontline workers.

SmartWage, which was founded in 2019, began by allowing businesses to provide their employees fast access to a percentage of their earnings and pay for work they have already completed.

It has since grown beyond that, providing businesses with a simple yet effective approach to digitize their most time-consuming HR operations, allowing them to focus on people while saving time and money. Employees who do not have access to email can use WhatsApp to receive company-wide communication, view pay stubs, request leave, and access financial wellness products.

Its seed funding comes from investors such as LoftyInc Capital Management, Creator Collective Capital, and Penrose Capital, as well as angel investors from Naspers, Dimension Data, Investec, and Standard Bank, and it was last raised in 2020. SmartWage intends to use the funds to expand its product and technology team, as well as double down on solving employers’ most pressing issues.

According to co-founder Simon Ellis, there is a communication gap between employers and employees, with frontline workers not feeling like they are a part of the company’s brand and promise.

“Payslips and leave are still done manually with paper printouts, and staff communication is done via notice boards or apps, both of which have high drop-off rates. Onboarding and disciplinary procedures are still done on paper, which costs companies time, money, and resources,” he stated.

SmartWage addresses these issues by reducing labor costs for employers, and the company has also built a suite of financial wellness tools, including free financial education and on-demand compensation.

“Through our approach, we’ve discovered that employees require cash access more than ever before.” “80% of South Africans struggle to make it to the end of the month without relying on some type of short-term debt, and the payday lending industry is expanding,” Ellis added.

“By saving employers time and money through digitalisation, we can bridge the gap between South African businesses and their frontline workers, allowing businesses to engage clearly and dynamically with their employees while also providing financial wellness initiatives.” We have a strong value proposition by providing solutions that help both employers and employees.”

Idris Bello, a founding partner of LoftyInc Capital Management, expressed his enthusiasm for the SmartWage product set’s scalability and potential effect in Africa and beyond.

“The SmartWage team is a trailblazer – they’re creating more than simply an earned wage access product, and they’ve realized that in order to have a meaningful influence on employers, they need to provide a compelling mechanism for companies to engage with their workforce.” We’re pleased to work with Simon, Caroline, and the rest of the SmartWage team to help them achieve their goal of driving digital inclusion across Africa,” he said.

Companies that use frontline staff, such as retail, quick service restaurants (QSR), manufacturing, construction, and hospitality, are among SmartWage’s clients. Its monthly active user base has increased 14 times in the last year, and it currently works with brands including Edgars, KFC, Debonairs, Seattle Coffee, Truda, and Twizza.