The founders of DailyPay have emerged with their latest startup. Salt Labs, a loyalty payments company focused on the nation’s roughly 79 million hourly workers, has raised $10 million in pre-seed funding.
Fin Capital, a fintech-focused venture capital firm that invested in software provider DailyPay, led the round for Salt Labs. Other investors include Anthem Venture Partners, which has funded mobile banking card provider CARD, and DO$H, the cash back app.
Salt Labs, of New York City, is looking to reinvent the total compensation received by hourly workers, who comprise the majority of wage earners in the U.S. According to data from the Bureau of Labor Statistics, there were about 119 million full-time wage and salary workers in the U.S, at the end of 2022. More than half, or 78.7 million, were hourly workers aged 16 years or older, BLS said.
Hourly employees typically include restaurant, grocery store and construction workers as well as some nurses that earn a set hourly wage. This group does not have access perks typically offered to salaried employees. “For those in the hourly workforce, or frontline workers, those alternatives don’t exist in one easy way. It’s not like you can go to McDonalds and here’s your stock option program,” said Jason Lee, the CEO and co-founder of Salt Labs.
Lee hopes to eventually change this. The app lets hourly employees earn rewards, or “Salt,” for each hour they work. Lee pointed to airline frequent flier or Starbucks reward programs as comparable platforms. Unlike those programs, Salt rewards don’t expire. Users can also transfer their Salt to friends and family, even if they don’t work at the same company, Lee said.
Initially, users can redeem their Salt on goods and experiences, such as travel and education, as well as digital assets like NFTs. Lee hopes to add properties and features that will make Salt “more asset-like,” rather than its current “points-like.” Workers in the future can potentially earn more Salt if they demonstrate certain behaviors like taking unpopular shifts or working at their employer for a long period of time. Employees may also be able to trade Salt, finance it (where they use it as collateral) or sell it for cash, Lee said. Salt Labs plans to work with employers to design the reward program for their employees, he said.
“Front line workers create lots of value, but it’s not captured in their paycheck,” Lee said. “We’re looking to create a system where workers can own the long-term value they are creating.”
Salt Labs currently employs 10 people. Right now, the company is testing the app with about 100 users and plans to launch more broadly in a month, Lee said.
Salt Labs is the latest startup from Lee and Rob Law, the co-founders of DailyPay (Lee was formerly CEO and Law was their chief technology officer, the same title he holds at the new venture.) Companies like McDonalds, Kroger and Dollar Tree use DailyPay’s software to help employees access their wages in real time. DailyPay has raised over $1 billion, including $175 million in equity capital and the remainder in a revolving credit facility and a term loan. (SVB Capital, the venture capital and credit investment arm of SVB Financial Group, provided a small portion of the DailyPay term loan, a person familiar with the situation said. SVB Financial, the parent of failed bank SVB, filed for bankruptcy on March 17.) DailyPay secured a $1.2 billion valuation in 2021. Investors have included Carrick Capital Partners, Azoic Ventures, and EQUIAM. Lee remains DailyPay’s largest individual shareholder.
In May 2022, Chime, the financial services app that was valued at $25 billion two years ago, made a $1.6 billion offer to buy DailyPay, and then bumped its offer up to $2 billion, according to a report from The Information, which was confirmed by Fortune. DailyPay’s investors rejected the proposal in the hopes the future would bring a higher bid, a person familiar with the failed negotiations said. Chime and DailyPay declined to comment.
Lee and Law both left DailyPay in mid-2022. In June, Kevin Coop, the former president of North America at Dun & Bradstreet, joined DailyPay as CEO.
Salt Labs and DailyPay target the same group—low- and middle-income wage earners. Not enough technology has been built for this sector of the economy, said Lee, who is the son of South Korean immigrants. The vast majority of immigrants are hourly employees who work at delis and restaurants, he said. Similarly, much of Lee’s family in the U.S. worked these kinds of jobs. “I grew up in this segment of the population,” Lee said, and noted that he can often be found at check cashing stores, payday lenders and in the parking lot of Walmart talking to consumers about their finances. He conducts this “research” to understand the financial needs and products of low- and middle-income consumers. “Only a handful [of apps] have been developed for this population even though they make up a majority of people in the country,” Lee said.
