Neobank Dave Inc. Targets Acquisitions, Crypto With SPAC Windfall

Personal finance startup Dave Inc. will use $450 million it’s expected to raise in its upcoming initial public offering (IPO) to make acquisitions, launch new products and possibly invest in cryptocurrency, The Wall Street Journal (WSJ) reported Monday (Dec. 13).

Dave has an app for consumers who often overdraw their bank accounts or run out of cash. The company will merge with special purpose acquisition company (SPAC) VPC Impact Acquisition Holdings III Inc. in the next few weeks, and then its shares will trade on Nasdaq in early January, Chief Financial Officer Kyle Beilman told WSJ.

The company is expected to be worth about $4 billion on a pro forma basis once it’s merged. Dave’s SPAC deal provides the company with both capital and stock to bid for other companies, Beilman said, per the report.

“We do see ourselves over the next couple of years being a consolidator in the space,” he told WSJ.

Dave raised about $61 million from investors, including venture capital firm Norwest Venture Partners, before striking its SPAC deal. Dave’s suite of financial products meets the needs of about 11 million customers, many of them living paycheck to paycheck, according to the report.

The company is expected to hit about $200 million in revenue this year, about 60% more than last year. The company doesn’t expect to reach profitability for the next several years as it focuses on adding more customers, Beilman told WSJ.

Among the items Dave is looking to launch is a peer-to-peer (P2P) donation account that works similarly to a GoFundMe account and a P2P money transfer product, similar to Venmo, the report stated.

About one out of four consumers (24%) say they are “slightly” or “not at all” comfortable sharing their bank account credentials with third parties, according to Convenience Versus Security, a PYMNTS and MX collaboration that surveyed 2,368 consumers.

Read more: 24% of Consumers Are Uncomfortable Sharing Bank Account Credentials With Third-Party Apps

Among those consumers, 60% are worried about theft of their money, 57% do not want to provide their account credentials to so many providers, 51% do not believe that the connections are secure and 45% do not trust the third party.