Lili, a banking application targeted to freelancers and gig-economy workers, raised $55 million as the fintech business moves past its development stage, the fintech company said in a Tuesday press release. The round was led by Los Angeles-based venture capital firm Group 11.
Nearly 60% of Lili's new customers are women, according to the release. The participation of women in the labor market dropped to its lowest level since 1987 in February, according to U.S. News & World Report, underscoring the difficulty women have had retaining work during the pandemic. Over 5 million women lost their jobs due to the COVID-19 pandemic, leading many to turn to freelance work, the press release stated.
"On top of the banking services, we're offering different services and tools to manage your business, like expense management, tax tools, financial insights, and also trying to solve all of the different pain points of being self-employed," Lili CEO Lilac Bar David told Payments Dive.
The $55 million Lili announced Tuesday pushes the company to $80 million in capital raised so far. Since its prior funding round in November, Lili's customer base has doubled to more than 200,000 active accounts.
The New York-based fintech serves a category of consumers who are not catered to by the majority of financial institutions, Bar David said.
"Up until today, you had consumer banking on one side and business banking on the other side," Bar David said. Lili is serving a specific segment of self-employed workers and entrepreneurs in the economy who have banking needs that are a cross between those of a business and a consumer, Bar David said.
A recent study by Marqeta found that 85% of gig workers picked up additional work during the COVID-19 pandemic because of limited cash flow. The freelance economy has also experienced a 700% increase in transactional volume since the beginning of the pandemic, according to a report from Upwork. There are approximately 60 million freelancers in the U.S. with 12% of the U.S. workforce starting freelancing this year, the Upwork report stated.
"The U.S. market and the potential within for the freelance economy is huge — we are looking at 40% of the U.S. workforce," Bar David said. "Because of all of the shifts between the U.S. workforce, due to COVID, and working from home, and unemployment, and so on, we are expecting [the workforce] to increase to 50%."
The recent funding will help Lili expand its products into credit offerings, invoicing and payments to remove pain points for freelance workers, Bar David said. Lili offers customers a no-fee account and Visa debit card linked to their Lili account.
"Taxes are one of the biggest pain points that we are trying to solve," Bar David said. "As a self-employed [worker], you're getting paid the full amount and, you know, you have to take care of all of your expenses, and save for taxes and file your tax reports."
The Lili banking app helps in categorizing transactions and payments, according to the IRS deduction category, for easy tax filing, the company said. It also aims to provide expense management tools and reports for better insights into consumers’ finances.
Over 90% of freelance workers associate faster pay with greater financial peace of mind, according to the Marqeta research. Lili’s banking app provides up to two days early access to funds into a customer account. The average monthly deposit in a Lili account is $1,500 per month. The company also provides savings accounts. The fintech partners with Choice Financial Group for its backend banking needs.
"Nearly 60% of customers are using expense management tools and around 40% of customers are using our savings account feature," Bar David said. "We're investing a lot of resources in creating content, which will empower [freelance workers] and make sure that they have access to all of the different resources as we want to be the go-to solution for freelancers."