A Canadian-based financial technology firm with an office in Scottsdale has raised a new funding round to continue nationwide expansion of its earned wage access platform.
ZayZoon raised $34.5 million in series B equity and debt financing, led by Framework Venture Partners with co-investment from Export Development Canada and participation from ATB Financial and existing shareholders.
ZayZoon provides workers with early access to wages they’ve already earned at the push of a button through integrating with payroll partners. The platform also offers educational resources and tools to help workers break the paycheck-to-paycheck cycle, according to the company.
The new round of financing will support recruiting efforts, product development and continued platform adoption among small and medium-sized businesses, said Tate Hackert, co-founder and president of ZayZoon.
“We believe there's a ton of value that we provide an employer as it relates to the engagement of their workforce,” Hackert said. “So this money is going to help us double down on the current business as well as build future products that really help create that connective tissue between an employee-employer relationship.”
ZayZoon reported more than 400% in year-over-year customer growth, driven in part by increasing popularity among national franchises using its platform, including Dunkin’, McDonald’s and Amazon. The company now has more than 10,000 businesses on its platform, Hackert said.
“Our mission really is to improve the financial well-being of the employees that we service and we quantitatively know that that's occurring,” Hackert said.
He added that nearly 75% of employees surveyed by the company report reductions in payday loans and overdrafts.
“We know that almost 90% of the employees that we survey say that we decrease their financial stress and so I think stats like that are super important to us because it shows that we're executing on the mission at hand,” he said.
Doubling down on growth
Hackert’s idea for ZayZoon was sparked after noticing an increasing number of people with steady jobs didn’t have access to traditional lending products. If they fell on hard times, they were forced to rely on predatory lenders, potentially leading them to fall deeper into debt.
After making money working on a commercial fishing boat, Hackert — who at the time was 16 years old — lent his personal capital to workers via Craigslist and the Canadian classified ads site Kijiji.
His business idea later evolved into ZayZoon and in 2014, he co-founded the company with Jamie Ha and Darcy Tuer to provide workers with on-demand, interest-free advances on wages they’ve already earned from employers.
“A number of years ago, we kind of saw this problem in the market. There’s a lot of individuals who live paycheck-to-paycheck but, unfortunately, the products that exist for them are less than satisfactory,” Hackert said. “You have payday loans, overdraft fees — things that end up costing the consumer quite a bit. We had a novel idea that has since turned into this entire industry called earned wage access.”
ZayZoon is based in Canada, but it opened an office in Scottsdale in 2017 to better serve the U.S., which is the company's target market, Hackert said.
In the past year, ZayZoon has increased its headcount from 55 employees to more than 100. The company will continue to hire as it "doubles down on growth," Hackert said.
“ZayZoon absolutely finds a ton of value in employees we have in the Phoenix area,” Hackert said. “There's an awesome pocket of tech that's moved there either from California or Canada and has made Phoenix their home. Specifically for us in a payroll space, Zenefits is Phoenix-based. One of our big partners is Vensure Employer Solutions, which is Chandler-based. So I think there’s a lot of talent in the area.”
