Rain, based in Los Angeles, raised a $75 million Series B round in another positive indicator for the fintech sector

Rain raises $75M to expand financial services as fintech grows.

: Rain, a startup based in Los Angeles, secured a $75 million Series B round led by Prosus with a post-money valuation of $340 million. The funds will support adding credit card and savings products to the platform, which includes other financial features such as overdraft alerts. Rain focuses on mid-market and enterprise clients, charging an ATM-like fee for instant transactions besides a free ACH option. The global fintech landscape shows a mixed funding environment, but with an increased average deal size in 2023.

Rain, operating out of Los Angeles, announced a significant milestone with the successful completion of a $75 million Series B funding round. Prosus led this all-equity round, valuing the company at $340 million. These new funds enable Rain to diversify its offerings beyond existing services like earned wage access (EWA) with planned additions of credit card and savings solutions. Such financial products aim to address the growing number of U.S. households, increasing from 32% in 2019 to 35% as per a Bank of America report, that live paycheck to paycheck, usually concentrated in the South.

Rain, founded in 2019, coupled its EWA app with financial wellness tools including overdraft alerts and spending trends. EWA allows users to access part of their pay before traditional payday, contrasting with high-cost payday loans, for a small fee. Rain focuses on offering a seamless experience to employers by integrating with major payroll and timekeeping systems. Alex Bradford, co-founder and CEO, emphasized minimal manual processing for employers, potentially improving employee retention as Rain has onboarded over 2.5 million employees.

The company targets mid-market and enterprise clients, exceeding 300 employees, achieving growth with a mix of complimentary and fee-based models. Short-term access incurs a fee similar to ATM charges, while users can choose a free option through ACH transactions. Rain enhances its financial culture with tools such as financial education portals, one-on-one coaching, and a tax filing service. These services have remarkably impacted its user adoption, with non-EWA services accounting for 70% of monthly uptake.

Looking ahead, Rain paves the way for innovation by integrating an EWA-secured credit card with dynamic limits on earned wages. Additionally, developments like a new product to facilitate Health Saving Account expenditures and savings accounts with automatic savings features reflect a robust expansion plan. This aligns with the strategic objective of diminishing dependency on EWA by encouraging more savings over time, a vision shared by Bradford who champions long-term financial independence.

This funding round coincides with a critical phase in the broader fintech sector. Despite the overall decline in fintech venture capital funding by 45% as reported by PitchBook, increased average deal sizes signify a more discerning investment approach. Employment-integrated models like Rain's EWA are facing competitive landscapes while sustaining growth and compliance, contrasting stances taken against employee-side models like Earnin over predatory lending allegations. Rain is committed to forming a comprehensive financial ecosystem, aligning with the mission to facilitate financial freedom for millions of users.

Sources: TechCrunch, Bank of America, PitchBook

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