Presenting our portfolio: Beforepay

Mar 18, 2021
SeedSpace Team

Tarek Ayoub is a driven entrepreneur with an ambitious vision for the fintech industry and its future.

He is the Co-founder and CEO of Beforepay, a company that is changing the way people access their pay cheque, providing everyday Aussies with access to their wages on demand. According to Ayoub, we are witnessing a revolution in the way credit has traditionally been distributed to individuals.

The entrepreneur’s journey

Early in his career, Tarek became interested in the way products are created in banks. “In any given moment, a bank has a ‘graveyard’ of over $300 million of products that they’ve attempted to put out to market, but didn’t work,” he says.

“I had a good understanding of financial products, and felt I could do something better. I initially went to work for some other startups, to get a feel for the startup world and learnt what worked, and what didn’t. Then, in early 2019, I came up with the idea for Beforepay.”

Tarek’s big idea landed when he stumbled across a report that said companies are losing $32 billion every year due to employee financial stress. “I got curious and started doing my own analysis,” he says.

“I pulled out a bunch of consumer banking reports and started reverse engineering the numbers to see if I could find the actual main driver of financial stress, and what I found shocked me. In Australia, 60% of people were living pay-to-pay, and 50% or more didn’t even have $1,000 in savings. It was terrifying.”

From this revelation, Tarek started investigating what it might take to help financially stressed people become financially well.

“I found a great report that highlights the 4 main pillars of financial wellness, which encompass — budgeting, saving, spending and borrowing. If you can master these, you won’t be financially stressed. I then realised I could create these four pillars in an app, and use technology as a catalyst.”

Timing is everything

In Tarek´s experience, the primary driver of a startup’s success is timing. If you start your business at the right moment, with a team capable of growing the company, a clear vision, strong leadership and good management, you will succeed. The key is to know when to start, and being able to understand the present but visualise the future.

“I didn’t want to take an Afterpay-style approach of signing up the employers first and getting them to sign up the employees,” he says. “There was way too much friction there, primarily the fact that if you’re an employee, you don’t want your employer to know you’re going broke! So we decided to go direct to consumer. A person can visit our app and within three minutes have access to funds without any human intervention.”

Just accessing funds wasn’t enough for Tarek though. “That’s why it has budgeting, spending, and borrowing tools, that we automate and thereby take away stress. One of our values is human first, so we look at the human element of everything. Budgeting is hard and quickly becomes overwhelming, and saving is tricky because it’s an unknown bucket that you put money into until you hit a roadblock, then take it out again — there’s not much natural incentive there. But we can build incentive using technology, and become an indispensable part of people’s financial lives.”

“You build a successful business when your product becomes part of people’s lives.”

It’s a cultural thing

From a team of three people in the beginning to now 28 and growing fast, Tarek is proud of his company’s culture and considers it key to the early success of BeforePay. He has built a team that loves the vision, and champions the company values across the board.

“Every single person in this company has a vested interest in making this succeed.”

“If a startup wants to grow fast, you need teamwork. At Beforepay, we all work together toward the same goal: improving people’s financial lives. Every person here truly believes that if the company succeeds, they succeed too.”

Changing our relationship with credit

Tarek and his team have developed a new sustainable consumer lending model that provides those in salaried jobs with access to their wages on demand (up to $1000 before their paycheck comes through), as well as budgeting and spending tools, all in one app. Since January 2020 — when the app was launched — the business has grown exponentially — in their first week alone they onboarded 20,000 users.

“I believe Beforepay and other innovative companies that distribute money in a more customer-centric way, like the BNPLs and such, will be the primary source of personal credit in the future. Banks will continue to own ‘big credit’ — i.e. the mortgage market and such, but credit companies won’t be profitable enough for them. We are just the beginning.”