Neo-Bank Dave Lands $100 Million FTX Investment To Grow Crypto Presence

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Two months after going public on the Nasdaq, digital banking app Dave is doubling down on its cryptocurrency plans after receiving a new $100 million investment from crypto exchange FTX.

The deal furthers Dave’s ambitions to rival competitors such as SoFi, which offers banking, investing and crypto-trading services all in one app. Crypto has been a target market of Dave’s dating back to before it went public this January via a SPAC merger.

The West Hollywood-based fintech startup already had ties to FTX: Alameda Research, the crypto trading firm founded by FTX CEO Sam Bankman-Fried, invested $15 million in Dave in a pre-IPO private placement deal last year.

Now, FTX is investing $100 million in Dave through its $2 billion FTX Ventures fund, while FTX US—the crypto exchange’s U.S. unit—is teaming with Dave on a “strategic partnership” meant to help it expand its crypto offerings. In a statement, the companies said FTX US will serve as Dave’s “exclusive partner for cryptocurrencies,” while the two firms will look to “introduce digital asset payments into Dave’s platform.”

In an interview with dot.LA earlier this year, Dave CFO Kyle Beilman said the startup was interested in using crypto to facilitate cross-border money transfers between the U.S. and Mexico.

On Dave’s fourth-quarter earnings call Monday, Beilman said the company could also use the money raised from FTX to pursue acquisitions, which he described as an “attractive component of our growth and capital allocation strategy.” FTX’s $100 million investment is not an equity deal, but rather takes the form of unsecured convertible notes—a type of short-term debt—that bear an annual interest rate of 3%.

In addition to announcing the FTX financing deal, Dave also released its first quarterly earnings report as a public company on Monday, covering both the fourth quarter and overall 2021 fiscal year. The firm reported quarterly revenues ($41.2 million) and full-year revenues ($153 million) that were up 16% and 26%, respectively, from their year-earlier periods—though it also posted a $15.2 million fourth-quarter net loss that contributed to $20 million in losses in the full 2021 fiscal year (up from $7 million in fiscal year 2020).

Dave also shared a bullish revenue guidance for 2022, projecting them at between $200 and $230 million in the ongoing fiscal year. The company also reported a growing customer base that surpassed 6 million users and more than 1.5 million monthly transacting members at the end of last year.

Those factors, plus Dave’s deal with FTX, sent the company’s stock climb more than 20% at one point in after-hours trading Monday—though it quickly moderated closer to Monday’s closing price of $10.60 per share.