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Activehours raises $39 million for its ‘rigid paycheck’ solution

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Activehours founder and CEO Ram Palaniappan


Activehours is trying to provide employees with more liquidity throughout the pay cycle and today announced funding of $39 million for its app. Andreessen Horowitz led the round, with participation from existing investors Matrix Partners, Ribbit Capital, and March Capital Partners.

“The rigid paycheck that only shows up every two weeks works well for companies,” wrote Activehours founder and CEO Ram Palaniappan, in an email to VentureBeat. “However, it doesn’t work well for employees. They have to manage the timing between payday and when bills are due.”

Employees with a direct deposit setup download the app — available on both iOS and Android — for free. They take a picture of their electronic timesheet to show how many hours they’ve worked and can then access up to $100 of their unpaid wages per day or up to $500 per week while they wait for their paychecks.

Activehours makes an advance payment by depositing the money into their accounts — employees are basically borrowing money against wages they’ve already earned. But contrary to commercial “payday loans,” there are no fees or interest rates involved. The system works on a community-type basis, whereby people refer the app to colleagues and choose to “tip” whatever they want to Activehours.

The Palo Alto-based startup has agreements with several payroll providers and plugs into their APIs to manage payments. Activehours deducts whatever it has deposited in an employee’s bank account from their upcoming paycheck. According to Palaniappan, the app is used by employees from more than 25,000 companies, including Starbucks, Apple, Home Depot, and Target.

The chief executive founded Activehours in 2014 when he lived in Cincinnati, Ohio and noticed that people sometimes couldn’t pay for gas while they were waiting for their paychecks. The startup still has operations in Cincinnati, where the customer support service is based.

Activehours has raised a total of $65 million to date. It will use the fresh injection of cash to grow its team of 200 by hiring engineers, product managers, designers, and data scientists.

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