Malaysia headquartered Paywatch secures US$30mil funding in largest raise for Earned Wage Access startup in SEA

• Funds to enhance employee wellness solutions and expansion across SEA
• Lead investor Third Prime invests in financial and industrial tech businesses

In what is believed to be the largest funding round closed by an earned-wage access (EWA) startup in Southeast Asia, Malaysian headquartered startup, Paywatch, has raised US$30 million (RM141 million) in funding from a mix of equity and credit facilities to supercharge growth.

Paywatch received over US$14 million (RM65 million) in Series A equity investment, led by Third Prime and a consortium of US investors, including Vanderbilt University and University of Illinois Foundation, with participation from new investors Octagon Venture Partners and Wooshin Venture Investment Corp. It also secured US$16 million in credit facilities from global banks, including Citi and other major banks.

[RM1 = US$0.212]

“Amidst this funding and tech winter, we take immense pride in the confidence shown by these esteemed investors and banks in our vision. From the outset, we firmly believed that providing Earned Wage Access at the lowest, nominal fee to users while ensuring access to major financial institutions was the sustainable path. Although it was a more challenging route to market, our rapid growth and portfolio of high-caliber enterprise clients validate our approach,” said Alex Kim, President & Co-founder of Paywatch who launched the company in South Korea in 2020 with his brother, Richard Kim.

An ESG employee benefit

Paywatch offers a debt-free EWA solution, also known as on-demand pay, an innovative employee benefit that allows workers to instantly access a part of their accumulated salary in real-time as it is earned, and before the end of their payroll cycle.

Paywatch’s solution has demonstrably decreased employees’ dependence on loans, alleviated household debt and enhanced financial management. Simultaneously, Paywatch’s seamless, fully automated system has substantially boosted companies’ employee retention and productivity, resulting in significant cost savings associated with hiring and training.

Paywatch has partnered and collaborated with a few Malaysian brands and institutions such as Lotus, Jaya Grocer, QSR Brands (including KFC and Pizza Hut), FFM Bhd, PayNet, Shopper360, Guardian (part of DFI Group), Corus Hotel (under MUI Group), Llao Llao (by Woodpeckers), Coway, Media Prima, University of Nottingham Malaysia, UNITAR and Durioo.

It touts these collaborations as testament to its dedication to providing a transformative financial service that caters to needs of the Malaysian workforce.

Most multinational EWA in Asia, biggest volume with US$58mil processed

As an enterprise-focused company serving the largest base of employees in Asia, the company has processed over US$58 million in salaries through its system to date and increased its disbursements to nearly US$8 million per month, which is growing month-over-month by as much as 15%.

Paywatch claims that this makes it the largest EWA service in Asia by volume of transactions. The company expects to reach well over US$120 million in salaries disbursed by the end of the year, more than doubling its lifetime volume.

Since its establishment in 2020 in South Korea, Paywatch has expanded quickly to three other markets - Malaysia, Philippines, Indonesia. The company is committed to this strategy, and “with the recent influx of funding, we’re poised to expand into new markets and develop even more financially inclusive tools for our users,” Kim said.

A significant portion of the Series A funding will be used to further enhance the company’s embedded finance offerings along with the company’s other innovation efforts.

Paywatch’s leading investor for this funding round is Third Prime, a U.S.-based early-stage venture capital firm that invests in leading financial and industrial technology businesses globally.

“We have seen EWA become a mainstream employee benefit in the US and Latin America. And when we look to Asia, we see Paywatch becoming the leading change agent in the region with enormous momentum. It is a thrilling time to witness the rapid adoption of earned wage access as it spreads across markets with different regulations and cultures, all working towards the same end goal of optimizing outcomes for the employee and the employer,” shared Michael Kim (pic), General Partner of Third Prime.

Aligning with Malaysia’s financial inclusion vision

With a strong base of clients in Malaysia, Paywatch’s innovative EWA solution is set to enhance the financial well-being of Malaysian workers, one of the outcomes stated in the country’s National Financial Inclusion Strategy.

By providing instant access to earned wages, Paywatch said it supports the Malaysian government’s efforts to reduce income disparity and promote financial resilience among its citizens.

First time for US university endowments

Vanderbilt University and University of Illinois Foundation direct investment in Paywatch is considered a milestone in the market as it is the first time these US university endowment funds have invested directly in an Asia-based tech startup.

“We have been advocating for financial inclusion for many years and believe that Paywatch’s earned wage access technology can push the movement forward in a meaningful way. Beyond the technology, we also believe in the company’s dedication and commitment to delivering true impact in Southeast Asia”, shares Travis Shore, Chief Investment Officer of the University of Illinois Foundation.