Minneapolis startup company adds pay advances to scheduling app features

Branch is a company in an increasingly crowded space as firms want workers to access their schedules across devices.

However, the startup company hopes to distinguish itself from its competitors — including local company When I Work — by focusing on the needs of hourly workers first, said founder and CEO Atif Siddiqi.

For example, the company's app allows workers to not only view or schedule hours but also to swap shifts with co-workers.

The app's newest feature, which will roll out widely in the next few weeks, is an alternative to payday lending.

Workers would be able to connect their debit cards to the Branch app and collect pay after completing a day's shift if they need it, up to $150 a daily and $500 a pay period.

Branch would then charge the card when workers receive their paycheck, with a guarantee that it won't take bank accounts into insufficient funds.

"It aligns with the idea that workers need flexibility," Siddiqi said.

Plus, hourly workers as a whole are more likely to live paycheck to paycheck, with surveys showing that a flat tire or child-care issue more likely to affect their ability to make it to work.

The company saw the need for the loan service from its own data: 70 percent of hourly employees using the scheduling platform said they had borrowed money from friends and family in the last three months.

More than 75 percent of the employees were incurring hefty overdraft and late fees to help deal with unexpected expenses.

The employees were trying to avoid the payday loan industry, which charges high interest rates and has been under scrutiny by the federal government and Congress.

At the same time, with an ever-tighter job market, employers are more likely to look at diversifying benefits, Siddiqi said. Keeping employees is cheaper than training new ones or covering for an absent worker.

Branch is a finalist for a South by Southwest Interactive Innovation Award in the new economy category.

In addition to the presentation at the Austin, Texas mega event in early March, Siddiq will be on a panel at Shoptalk in Las Vegas and then participate in the Montgomery Summit in Los Angeles for privately funded tech companies.

Branch — formerly Branch Messenger — does not charge employees for its services. Employers pay a fee per employee to use the app as their scheduling tool.

The company does not require its customers to connect the Branch Pay feature to their payroll systems since the transactions are through workers' debit cards, which makes it more of a value-added feature for employers, he said.

The company now is working on adding more value to the app, such as budgeting tools for employees.

"Our North Star is finding ways to add value to workers' lives," Siddiq said.

Siddiqi started the company in Los Angeles in 2015.

A year later, after participating in Target Techstars retail accelerator, he moved the firm to Minneapolis.

At that time, the company had three employees and grew to 20 as it started pilot programs with companies such as Target.

After receiving $10 million in venture funding in 2017, it has expanded to 50, with plans to add 20 more employees.

The company, which had been operating out of shared work spaces, now has its own offices in the Grain Exchange Building in downtown Minneapolis.

The app is used by Target call centers, Life Time fitness centers, Iowa-based Kum & Go convenience stores and several other retail and restaurant operations.

Siddiqi sees the Twin Cities as a strong competitor in the startup economy.

He said his company has had no trouble recruiting local talent and new graduates and professionals from out of state.

"Even since we came to Minnesota, we've seen great growth in the ecosystem for startups," he said.

With several current accelerator and incubator programs, and more being added, larger companies are now more receptive to working with small companies, Siddiq said.

And, he said, more young professionals view smaller companies in the state as "viable career paths."

As far as funding for young companies, he said the venture capital for early stage firms has improved.

However, later-stage startups do not yet have as many options in Minnesota, although Chicago and Ohio have some strong opportunities for capital.

Catherine Roberts • 612-673-4292