Branch Raises $48m In Series B Into contractor payments.

Branch, a company that has developed a platform for flexible workforce payments, declared today that it has closed on a $500 million credit facility and raised $48 million in Series B funding.

The equity funding was headed by Lee Fixel’s Addition, which has supported companies including Flipkart, Stripe, and Coinbase. The credit facility was secured by assets purchased from funds managed by Neuberger Berman.

Along with other investors, Drive Capital, Crosscut Ventures, Bonfire Ventures, Matchstick Ventures, and HR Tech Investments LLC, a division of Recruit Holdings Co., Ltd. (a partner of job-search website Indeed), took part in the equity fundraising. The Minneapolis-based Branch has received a total of $58 million in equity funding since its founding in 2015.

This is Branch’s first pay increase since 2017

Atif Siddiqi, the CEO and creator of Branch, would not say at what value the company’s current round of funding was obtained. Still, he did mention that in 2020, the company’s revenue increased by 300% year over year, and the number of businesses using its platform increased by 700%.

The Branch was created to provide businesses with a quicker, more affordable alternative to pay employees and contractors, which potentially may help them recruit and retain talent and save money compared to conventional payment methods. 

The Branch initially focused on a use case of assisting employees in picking up extra hours at organizations they already worked to increase their pay when Siddiqi initially established the business. The group next turned its attention to other potential financial aid options for these employees.

The fact that we were linked to so many different enterprise platforms was one of our assets. Additionally, Siddiqi told TechCrunch, “We were gathering a tonne of really intriguing employment data. We discovered we could substantially improve this consumer’s financial service experience using that data.

Typically, the Branch targets low- to moderate-income consumers and stands in the way of the company’s payment flows to its employees.

It began with earned wage access and then started expediting payments for employees. Since then, it has grown to include applications like electronic tip payments.

Siddiqi says, “One of the things we observed when we worked with several Domino’s franchisees is that a lot of them didn’t have enough money at the end of the day to tip out their drivers. Some people used Branch’s Wallet service rather than going to an ATM to collect cash since it allows franchise owners to push tip money in real-time once a driver completes a shift.

  According to Siddiqi, tips make up roughly 40% of a driver’s monthly salary, which is a sizable amount.

The Branch later diversified into contractor payments, offering services like helping businesses pay their 1099 contractors more quickly and consistently

The Branch is what it is now because Siddiqi says, “We recognized we could design a better financial service experience from the ground up.”

According to Siddiqi, the business makes an effort to offer as many free options as possible, including not charging for instant transfers into the Branch Wallet and non-instant transfers to other financial accounts.

  Like many other fintech, the start-up essentially makes money from interchange fees. Additionally, transferring money instantly from the Branch Wallet to another financial account incurs a transaction cost.

According to Siddiqi, faster payments are a crucial benefit today’s labor expects. We’re delighted to bring rapid payments and other fun tools to more industries and workforces, from fellow workers living paycheck to paycheck to independent contractors building their businesses. We’ve seen how it can drastically improve cash flow for both businesses and workers.

With a new agreement with influencer marketing platform Tagger and other on-demand delivery platforms, the firm has moved into contractor and influencer payments to expand outside the multibillion-dollar earned wage access market. 

Wrap Up,

Although the business and another fintech, GigWage, are comparable, Siddiqi claims that the Branch has established its payment rails and system to push out payments immediately and has options for W-2 workforces.