Fintech startup Dave introduced on Monday that it’s going to go public by merging with particular function acquisition firm (SPAC) VPC Affect Acquisition Holdings III (NYSE: VPCC) in a deal that values the corporate at $4 billion.
SPACs have change into a well-liked approach for personal fintech firms to go public, with SoFi Applied sciences (NASDAQ: SOFI) being among the many extra distinguished offers in latest months.
Right here’s what fintech traders have to learn about Dave.
Dave has created a banking app that gives a wide range of monetary providers to customers from the palm of their hand, together with interest-free paycheck advances and financial institution accounts with out overdraft charges.
The corporate’s flagship characteristic, ExtraCash, was a method to permit customers to keep away from overdraft charges and Dave estimates that it has collectively helped its neighborhood keep away from $1 billion in overdraft charges thus far. The platform additionally capitalizes on the booming gig economic system with a characteristic known as Aspect Hustle that lets customers discover small aspect jobs to earn more money. The characteristic Insights permits customers to trace their upcoming payments whereas sending notifications designed to forestall overspending.
Dave believes that its characteristic set can handle many widespread buyer ache factors related to conventional banking providers, permitting the corporate to develop a loyal person base. Dave at the moment has over 1.3 million members that pay $1 monthly in membership charges. Dave Financial institution customers are forecast to develop at a compound annual development fee (CAGR) of 95% by way of 2023.
“We consider the legacy monetary system has didn’t ship and at present, greater than 150 million folks want our assist to construct monetary stability,” Dave CEO Jason Wilk commented in a launch. “Dave is upending the banking business with our suite of breakthrough monetary merchandise and making a significant affect on our prospects’ lives.”
The corporate is increasing past the core app and has launched Dave Financial institution, providing accounts with fewer charges and in addition permitting Dave to make cash on interchange charges from debit playing cards. Common income per person (ARPU) within the first twelve months of a person becoming a member of the platform is roughly $43, however this monetization metric climbs to $95 for customers to hitch Dave Financial institution.
Income in 2020 was estimated at $122 million, with Dave forecasting gross sales rising to $533 million in 2023. Distinctive customers are anticipated to develop to 11.4 million by the top of that yr, in response to Dave’s estimates.
The deal’s construction
The merger with VPC Affect Acquisition Holdings III assigns Dave a post-money fairness valuation of $4 billion. The SPAC has $254 million in money in its belief, and the sponsor has lined up $210 million in PIPE (non-public funding in public fairness) financing being led by Tiger International. Different distinguished institutional traders taking part within the PIPE embrace Wellington Administration and Corbin Capital Companions. After paying transaction charges, $389 million will go to the mixed firm’s steadiness sheet.
Current Dave shareholders will roll over their fairness and personal 87% of the mixed firm, with the SPAC shareholders having a 6% stake. PIPE traders will get 5% and the SPAC sponsor will take dwelling 1% for placing the deal collectively.
The deal is anticipated to shut late within the third quarter or within the fourth quarter, at which level the ticker image will change to “DAVE.”
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