At time of publication: Seed | Total Funds raised 4.5mn USD
******
The nature of employment has been changing over the past few decades towards freelancing and this has accelerated post-Internet. An industry report claims around 59 million workers in the United States (36% of the workforce) engage in freelance part time or full time.
Many who freelance provide unskilled services.
In fact the top platforms we tend to associate with the gig economy like Uber, Lyft, DoorDash, Instacart etc. engage with millions who provide unskilled services.
While these platforms undoubtedly provide flexible schedules and temporary employment, the jobs are commoditized and provide low incomes.
And people with low incomes (gig economy or not) have very high fluctuations in their monthly earnings.
High fluctuations in monthly incomes create credit needs for workers with low incomes. Often this credit comes at very high (and often predatory) cost and creates an unfair and vicious debt cycle for these workers. However, this need not be the case.
Lean is building financial products for the ‘Flex’ workforce across industries - Ridesharing, Warehouse, Delivery, Home Services, Construction, Healthcare etc.
Lean provides some very important and much needed solutions for the gig economy workforce:
1. Instant Payouts - Workers do not have to wait till the end of the week to get the earnings (for gigs completed) from platforms. Workers can get instant payouts right after a gig is completed.
2. Cash advance - A cash advance up to $1000 at no cost. This is immensely helpful and prevents workers falling prey to payday lenders for small but much needed cash needs
3. Other Financial Products - The website claims access to mortgages and insurance though this seems to be in the pipeline. I imagine, this will be the monetization opportunity for Lean
Lean has taken an interesting and differentiated go-to-market approach - the startup reaches workers not directly but but via the gig platforms. This is a great approach and helps a lot on many fronts:
Very low customer acquisition costs
Verification of active workers on the platform
Real-time stream of data that helps in better understanding and lower risks
Opportunity to push more products in the future
Higher retention and usage
Credibility to partner with financial services partners
High switching costs once a platform partner is acquired which is a great moat
Why will the gig platforms partner with Lean? Because it is a great win-win situation
Many platforms will want to offer solutions like instant payouts but will not able to build one in-house
Even if they build such solutions like Uber (which has Uber Instant Pay), a third party like Lean can launch more product solutions faster
Such solutions also help in retention of workers in the platform
Lean also shares margins and monetization with the platforms. Since these platforms are usually low-margin, this provides an additional lucrative monetization opportunity
Once Lean partners with a platform, the active platform workers get an access code to set up a Lean account. Lean is planning to roll out its products via platform partners initially to 200k+ workers.
Workers get access to virtual and physical debit cards and can immediately start spending. Completed gigs immediately appear on Lean and are available for instant payouts.
Having a real time stream of income and gig data on workers enables Lean to understand them better and offer credit access.
As mentioned earlier, Lean is also planning to offer mortgages to the workforce which can be monetized and a part of the margins will be shared with the platforms.
In the future, Lean can also build better credit scoring models for the workers opens up more partnership opportunities with banks and hence both more monetization opportunities and lower credit costs for workers.
Lean has strong moats: the B2B2C approach, i.e. the partnership model is very capital efficient and has high switching costs once a partner is locked in. The partnership approach also builds a decisive data advantage for Lean.
The partnership model enables a better product and is win-win for all stakeholders involved with great outcomes for workers. The current alternative for workers are often predatory payday loans.
Lean has a stellar founding team with deep domain expertise and in building products: Tilak Joshi (Mint, Amex), Eden Kfir (Fido solutions), Ramki Venkatachalam (Zenefits, Pinterest). Lean has attracted investments from a number of operators of multiple gig platforms like Doordash, Instacart, Uber, Postmates etc.
Lean is a High Potential Startup - caters to a large and growing market, offers highly impactful and much needed solutions to customers with poor current alternatives, has a capital efficient distribution approach (B2B2C) that aligns all stakeholders and enables a better product, has strong moats and is led by proven founders.