Challenger bank startup Dave is partnering with special-purpose acquisition company (SPAC) VPC Impact Acquisition Holdings III (VPCC), sponsored by Victory Park Capital (VPC), with an expected equity value of about $4 billion.
“At Dave, we’re committed to improving the financial health of our members,” Jason Wilk, co-founder and CEO of Dave, said in a press release on Monday (June 7). “We believe the legacy financial system has failed to deliver, and today, more than 150 million people need our help to build financial stability.”
The Los Angeles digital bank will file under the ticker symbol DAVE. The deal is forecasted to result in more than $375 million of cash on the combined entity’s balance sheet. VPCC’s contribution will be a maximum of $254 million. In addition, there is a $210 million PIPE (Private Investment in Public Equity) investment led by Tiger Global Management, with additional participation from Wellington Management and Corbin Capital Partners.
The app-based bank has been backed by Norwest, Section 32, Capital One, Mark Cuban Companies, The Kraft Group and others. Aside from Wilk, the company’s board of directors includes Mark Cuban, Bill Maris (Google Ventures founder), Dan Preston (CEO of Metromile) and Parker Barrile, partner at Norwest Venture Partners.
Launched in 2017, Dave’s financial platform is used by some 10 million customers, offering banking services in addition to overdraft protection. The app also helps people build credit and find side gigs, the press release indicated. The bank estimates that it has helped customers sidestep close to $1 billion in overdraft fees through its ExtraCash solution. Its gig economy job board, Side Hustle, helped Dave’s customers earn more than $200 million.
Dave Banking, which launched in December 2020, has over 1.3 million members using its spending account and no-fee debit card.
“Dave’s growth and expansion over the last few years have been significant, and we believe that the company has only scratched the surface of what it can achieve,” said Brendan Carroll, co-CEO of VPCC and senior partner and co-founder of VPC.
The rise in the number of startups merging with SPACs to go public has the attention of the U.S. Security & Exchange Commission (SEC) and other investment experts. John Coates, acting director at the SEC’s corporate finance unit, said in April that there could be “yet undiscovered issues” with SPACs.