Karachi-based salary advance platform Abhi has raised $2 million in a seed round led by Vostok Emerging Finance, it announced in a statement today. The equity-only round also included the participation of Village Global, Sarmayacar, i2i Ventures, Zayn Capital, and Portman Wills, the co-founder and CTO of Wagestream, a UK-based financial wellness platform for corporate employees. The startup has also been accepted to join Y Combaintor’s upcoming batch, it states in a statement. It is the second Pakistani fintech to have been accepted for YC’s next batch.
Founded by Omair Ansari and Ali Ladhubhai earlier this year, Abhi will enable employees of its partners to withdraw their accrued wages anytime they want, through its web or mobile app. The solution that is Shariah-compliant will charge employees a small transaction fee and will be completely free for employers. It also won’t have any impact on the balance sheet of employers as advances will be funded by Abhi. The repayments and fee will automatically be deducted from an employee’s monthly salary (if they’ve taken an advance) before it gets paid by the employer.
In addition to corporate employees, Abhi also plans to serve blue-collar workers, its co-founder and CEO Omair Ansari told MENAbytes, adding that the startup will look to expand its services to markets in GCC, Africa, and South Asia, by 2023. He has previously led investments in fintech startups in emerging markets and was working as a Portfolio Manager at Morgan Stanley before starting Abhi. Omair has also served as a Strategic Advisor to Vostok Emerging Finance, the investor that led the round, from 2018 to 2020.
In a statement, he said, “We believe financial wellness and access to credit are basic human rights, which we aim to bring to all our customers. Our goal is to digitize consumer credit, address pain points in the manual payments process and be there when consumers need us most. Your wage is your right, and we want you to have access to it Abhi (“right now” in Urdu).”
Ali Ladhubhai, Abhi’s co-founder who has previously founded a financial comparison startup KarloCompare, said, “Less than 2 million people in Pakistan have access to formal credit. We saw the need for an early wage access product that could allow them to access alternate digital finance together with a knowledge center to educate them about using personal finance responsibly and to their benefit. This is just the beginning for us. We have plans to provide a range of digital financial services to allow for customers to conduct all financial transactions from a single financial app.”
The Karachi-headquartered fintech is currently conducting a three-month pilot with 20 companies in different industries – including insurance, steel manufacturing, pharmaceutical, textile, and retail, to learn insights on pain points of employees and their lending needs, and validate its product. Its app will go live later this year.
Dave Nangle, a Partner at Vostok Emerging Finance, said, “We are very excited to partner with Omair, Ali and the Abhi Team. This investment allows VEF to continue our mission of improving the financial well-being of the average Pakistani. The traditional pay cycle has tied up employees’ earned income for as long as we can remember, forcing workers to turn to overdraft, payday loans and other punishing products.”
“We hear companies talk about ‘Digital Transformation’ all the time; modernizing the pay cycle is the most fundamental transformation a company can make to its relationship with employees. It is a great scale product, a win for all involved and the cornerstone for a much broader employee financial wellness play,” he added.
Vostok Emerging Finance interestingly is also an investor in Finja, a Karachi-based fintech that offers different types of lending solutions to small businesses and individuals including salary advances.
Sarmayacar’s General Partner Dr. Bernhard Klemen, said, “The annual salaries of the urban employed labor force across 100,000 public and private companies in Pakistan is estimated to be over $65 billion yet official reports suggest that formal lending channels account for credit of just over $3 billion only, with millions of Pakistanis accessing informal channels at egregious rates. Sarmayacar believes in Abhi’s vision and is delighted to back Omair and Ali in transforming the way Pakistanis access credit and over time build the region’s leading finance wellness platform.”
Misbah Naqvi, the co-founder and General Partner of i2i Ventures, added, “Access to earned wages should be a right of all employees and we are delighted to support Omair and Ali as they launch a pioneering business in Pakistan. Fintech is an exciting space in Pakistan right now and we feel that the Abhi team has the right experience and is well-positioned to leverage this market opportunity to build Pakistan’s first financial wellness platform and broaden financial access in one of the largest untapped markets in the world.”
The startup plans to use the investment to continue developing its product, expand the team, and fund advnaces. Abhi currently has a team of over 10 employees in Karachi and Lahore.