PeakSpan’s Thesis for Tapcheck

PeakSpan Capital
7 min readJun 23, 2022

Joining forces with a bootstrapped business like Tapcheck is always a special moment. Having worked with over 75 ScaleUps as a team at PeakSpan, we’ve garnered a deep appreciation for the conviction and effort required to start and scale a business to seven figures in revenue without any institutional capital. We feel humbled and privileged to be leading Tapcheck’s Series A financing. This business sits at the intersection of two themes we care deeply about at PeakSpan and which we’ve been looking at since before the launch of our first fund: i) payments and ii) human capital management. Tapcheck currently offers employee financial wellness solutions and early wage access to hourly workers. The Company has a strong presence in the quick service restaurant (“QSR”) and home health verticals and is currently serving 1,000+ companies including the likes of McDonalds, Dunkin Donuts, Burger King, Little Caesars, Planet Fitness and Denny’s (to name just a few!).

Tapcheck is attacking an enormous market opportunity with a legitimate chance to win it, and if not — at least capture an extremely large slug. What is Tapcheck looking to win exactly? We are currently witnessing “round one” of a decades long battle over consumer wallet-share. With the rise of embedded financial services, platforms like Tapcheck are being presented with attractive pathways to capture mind and wallet share from consumers. These pathways didn’t exist years ago given the tech infrastructure required to support them. Using these pathways, companies like Tapcheck can offer 10x more value than traditional financial services providers such as banks, brokerages and insurance companies are offering, and ultimately displace legacy financial institutions altogether as the now tech-enabled digital wallet and central convergence point for managing finances. This is a big statement to make and surely other categories of FinTech are attacking this opportunity. So why Tapcheck?

Here’s why — for Tapcheck’s ideal end user (an hourly wage worker), the solution is uniquely positioned in two key areas. First, in the employee’s pocket. Access to your earned wages with a few clicks on a smartphone. That is powerful and infinitely more appealing that working with a bank or payday lender. Second, the solution is tightly integrated with the individual’s employer timeclock and payroll software (so Tapcheck is positioned where the money is earned AND where it is spent which is important). Taking a step back, if we think about the best way to capture consumer spending, what better way than to capture it at the VERY MOMENT it is earned, even BEFORE it hits the employee’s bank account. With the launch of the Tapcheck pay card, employees can access ~70% of their earned wages for free, so long as they agree to deposit their wages on the Tapcheck pay card. Once the wages are on the Tapcheck pay card, the employee can use that card anywhere (it’s a digital debit card, or physical upon request). Tapcheck earns interchange fees once that money is spent. However, the opportunity doesn’t stop here — once you offer the consumer a digital wallet and can create incentivization (free early wages) to deposit money with Tapcheck and not the traditional bank, what else can be offered? Currently, Tapcheck offers financial literacy products and will soon be leveraging our Series A capital to develop against an ambitious roadmap of valuable consumer financial products surrounding savings, investing, healthcare, employer benefits and much more. The sky is the limit and given Tapcheck is the only application offered by the employer being used by the employee, I like our chances of offering more and more value over time.

Tapcheck is building towards a vision of being THE employee financial wellness platform of choice for employers. The end-result may look and feel like a consumer financial wellness-platform or even a neobank at some point, but the methodology and GTM strategy is what really had our team leaning in. After all, we are B2B investors. With a B2B2C GTM model where the B2B sale (Tapcheck > the employer) is free, and the B2C (early wage access > employee) will also be free, the game then becomes that or developing game-changing products and offering these in a dead-simple, easy-to-use platform for employees (and again, when you are the only financial wellness app being offered, Tapcheck effectively becomes a monopoly when it comes to accessing your wages early for free). Bringing things full circle, when we think about who is losing out on these funds (banks, credit card companies, insurance, etc.), it’s quite hard to pencil out feasible strategies for these firms to fight back other than to acquire (even white-labeling presents integration challenges). Why? Because if our tenure as human capital management investors has told us anything, it’s that integrating with payroll/timeclock software is not for the faint of heart, nor is it in the wheelhouse of your local bank branch. Tapcheck’s combination of i) strong integrations (>70!), ii) an easy-to-use mobile application and iii) a freemium pricing model is a combination that is hard to replicate and where we see ample upside vectors through the expansion of products and services.

….And that concludes the evil genius / master plan portion of today’s blogpost. See below for the official investment thesis published in PeakSpan’s internal investment memo, plus an abbreviated version of the industry research supporting our decision to invest.

Investment Thesis

The Early Wage Access space has existed for a decade with a strong acceleration in momentum in recent years and is widely accepted to represent one of the greatest areas of opportunity in the employee benefits space. Advancements in financial infrastructure, pay cards and consumer adoption of digital payments have propelled this space to be front of mind, especially in the context of a challenging labor market and overall economy. Hourly workers have traditionally struggled with financial stress, costing employers >$500B annually. Throughout the Great Resignation, employee movement has consistently been at or near all-time highs, especially in Tapcheck’s focus verticals of food service and home care. EWA solutions have become a mission-critical strategy for employers to differentiate themselves, improve their employee experience/health and boost employee retention. Tapcheck’s B2B2C focus provides the stickiness of B2B customers who implement the platform for free while also enjoying the upside seen in consumer facing FinTech. Existing solutions in the space are well funded and focus primarily on serving the enterprise market but all segments enjoy significant greenfield. The SMB segment that Tapcheck initially has focused on has limited competition and is relatively underserved given the requirement to work with a higher volume of payroll, time & attendance systems, creating an opportunity for a category leader to emerge. Overall, Tapcheck’s strong product, focused ICP and GTM strategy combined with their speed and integration depth sets them apart from legacy providers who are not able to satisfy the varying needs of SMBs. Tapcheck’s high close rates (40%+) and short sales cycles pair well with their land and expand model whereby the team can expand nicely from within franchise groups and multi-location businesses while also driving increased penetration with employees, offering users an ever-expanding menu of personal financial wellness solutions. The market for EWA is estimated at $26B with less than 15% penetration to date. Tapcheck represents a differentiated platform in a highly strategic segment with strong technical and partnership moats.

1. Low-to-Moderate Income Earner Costs

  • ~20% of Americans have overdraft fees or late charges, costing individuals ~$1,3k/yr.
  • Eliminating these fees would increase the amount of money in the economy by $22B
  • 78% of workers live paycheck to paycheck
  • 44% of employees making less than $61k per year have less than $500 saved

2. Market Alternatives

  • Market alternatives such as payday lending charge interest rates of up to 400%
  • The average bank-assessed NSF fee is $30
  • Most companies do not offer loans or advances
  • FinTech providers, Neobanks and banks can only offer EWA 24–48 hours prior to payday

3. Payments Trends

  • Card payments grew to 9B txns in ’22 led by Ecomms, online grocery and food delivery
  • Digital payments are expected to grow at 12.8% from 2022–2026, reaching $13.8B by 2026

4. Economic Assistance

  • More than 43 million people in the United States receive food assistance
  • The government spends ~$100B every year to ensure families can purchase healthy food
  • The government is making a push to offer this via “Electronic Benefit Transfer” pay cards
  • Merchants more widely accept EBTs which are held in a digital wallets (like Tapcheck)

5. Digital Wallet Growth

  • The % of Americans who will use a ‘Digital-Only’ bank account will double from ’21-‘25
  • The # of transactions made using digital wallets is projected to be $5.8 billion in 2021
  • 82 percent of Americans are using digital payments

6. Neobanks

  • The number of digital-only banks has risen from 250 in 2020 to 333 in 2021
  • The market for Neobanks is expected to grow as a 47.7% CAGR from 2021 to 2028
  • By 2028, the estimated market size of the Neobanks will exceed $722B
  • Tapcheck is the lightest-weight form of a Neobank with the ability to deposit/hold/pay

7. Talent Acquisition Trends

  • 74% of employees prefer to work for employers that offer financial wellness benefits
  • EWA can result in a 200% increase in job applications

8. Employee Productivity Trends

  • Offering EWA has been shown to improve employee productivity by as much as 86%
  • 53% of employees spend >3 work hours/week dealing with personal finance issues
  • 68% of employees feel personal financial issues are impacting their health

9. Worsening Hiring Market

  • Hospitality/food service saw the largest volume of employees leave the workforce in ‘21
  • Experts cite the pandemic having led to the tightest labor market in the last 20 yrs.
  • 6% of companies offer EWA. 79% of employees would switch to an employer with EWA

10. Opportunity Cost to Employers

  • 84% of employees worry about their finances while at work
  • Employee financial stress costs employers $500B/yr. (absenteeism, quality, and turnover)



PeakSpan Capital

We are a leading growth stage investment firm partnering exclusively with disruptive B2B software companies.