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Contxto – We’ve said it once and we’ll say it again, raising substantial seed rounds can be quite the undertaking for startups. One Mexican fintech by the name of minu, however, just raised one of the largest seed rounds in Latin American history, a whopping US$6.5 million to be exact!
What makes this investment even more special are the VC firms behind the deal, including QED Investors. Tech gurus such as Bill Gates, Mark Zuckerberg and Jeff Bezos are some of the famous limited partners at this Silicon Valley fund.
Other investors in the round included Village Global, Mountain Nazca, Next Billion Ventures, as well as various individual investors such as Cornershop and PayU founders.
With this new capital, minu will be capable of continuing to provide instant 24/7 support to Mexican workers earning an hourly wage while living paycheck to paycheck.
Approximately 75 percent of Mexicans survive from one paycheck to another, according to minu CEO Nima Pourshasb. Complicating matters is the fact that many don’t have any savings to fall back on.
Burdened by the lack of liquidity options, many often take out loans with excessively high-interest rates and abusive fees. This is why minu has developed a disruptive financial solution for working folks, providing them with continuous access to their earned wages.
“The current options are complex, inadequate, and expensive, and promote a cycle of indebtedness that favors poverty,” said Pourshasb. “minu boosts employees’ financial freedom with a disruptive, albeit simple solution: instant access to funds that you have already earned.”
How does it work?
While it may sound like minu disperses low-interest loans, it doesn’t. Rather, it collaborates with HR teams to set up payroll through them at no added cost.
As a mean of improving the financial health of employees, minu offers a platform where users can withdraw their salary for the hours they have already worked.
This means that they don’t have to wait until the next quincena to pay for certain expenses, whether it be rent, car payment, telephone, etc.
Based on the number of hours worked and funds available, users have access to this all over the app. With minu, it only charges a fixed US$2 transfer fee when sending funds from the app to a bank account.
Partnering HR teams can even configure certain features to help employees budget and spend money more wisely. These include calculating the percentage of earned salary available for withdrawal or capping the number of withdrawals per pay cycle.
Companies that use minu have been proven to improve their retention rate by 10 percent, meaning fewer people are quitting. Partners have also reported a 20 percent improvement in productivity as well as more candidates wanting to apply, according to the fintech’s website.
Based on how accommodating this financial arrangement seems to be, I certainly understand the appeal. Businesses that are currently using minu’s service include iVoy, SkyAlert, LaMudi, among others.