As Its SPAC Listing Nears, Neo-Bank Dave Has Its Sights Set on Crypto
Los Angeles-based banking app Dave is poised to debut as a publicly traded company via a SPAC deal this week, and has plans to use some of the proceeds to wade into the crypto waters.
Dave, which is valued at $4 billion and backed by famed investor Mark Cuban, anticipates closing its merger with blank-check firm VPC Impact Acquisition Holdings III this Wednesday. If all goes according to plan, it will begin trading on the Nasdaq stock exchange on Thursday.
According to Kyle Beilman, Dave’s chief financial officer, the fintech company is looking to deploy some of the $465 million raised from the SPAC deal to explore cryptocurrency product offerings for its 11 million customers.
One area that Beilman said is under consideration: money transfers, which are ripe for disruption by crypto and blockchain technology. He cited the U.S.-Mexico remittance corridor, which is among the largest in the world with more than $40 billion sent from the U.S. to Mexico in 2020, according to Mexico’s central bank.
Dave Chief Financial Officer Kyle Beilman
“It’s hard to ignore the impact that crypto is having on the overall market, and I think there’s an opportunity for us to participate there,” Beilman told dot.LA. “We see the U.S.-Mexico cross-border remittance market as an interesting potential opportunity for us to explore.”
Dave already has well-placed partners in the crypto sector. In August, Alameda Research—a crypto trading firm founded by Sam Bankman-Fried, the billionaire founder and CEO of crypto exchange FTX—invested $15 million in Dave through a private placement funding deal in advance of the SPAC merger. That investment was part of a larger $210 million private investment in public equity (PIPE) deal, led by New York-based investment firm Tiger Global Management, that will flow into Dave’s coffers after its trading debut.
“It gives us a little bit more firepower leading up to the [SPAC] close,” said Beilman, noting that Dave and FTX are exploring potential partnerships. “It really highlights their commitment to the business that they were just willing to step up early and support us.”
Dave is part of a wave of L.A.-based tech firms that have pursued SPAC mergers over the past year—a group that includes fellow “neo-bank” startup Aspiration, as well as electric automakers Faraday Future and Xos.
After an explosive 2020, the SPAC market cooled somewhat in 2021 thanks in part to regulatory concerns. In the case of Dave, heightened regulatory scrutiny caused the company to delay its IPO by several months, forcing it to downsize its financial projections for 2021 and beyond, Beilman explained.
After generating revenues of $122 million in 2020, Dave had expected to grow that figure by 58% to $193 million in 2021. But after pushing back its plans for a late-summer IPO, that target was cut by roughly 20% to the mid-$150 million range, Beilman said.
Having delayed some of its planned investment initiatives as a result, Dave is now eyeing acquisitions and new product developments with the windfall from the SPAC merger.
“M&A is a really attractive potential way for us to accelerate our ability to be that one-stop shop and be at the center of our members’ financial lives,” Beilman said.
Dave also is considering a non-crypto crowdfunding product, modeled after GoFundMe, which would allow people to raise money for events and expenses, and has plans to launch a peer-to-peer money-transfer product similar to Venmo, Beilman said.
The startup, founded in 2017 by CEO Jason Wilk, recently moved its headquarters in October from Mid-Wishire to the Pacific Design Center in West Hollywood. It ramped up its workforce in 2021—growing to more than 265 employees, with plans to eclipse 400 within the next year or so.
“The bulk of the hiring will be done here in L.A.,” said Beilman, adding that the company is hiring engineers, marketing specialists and others across the country as it builds out its business.
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In this episode of LA Venture, Julie Wroblewski talks about starting Magnify Ventures and helping modern families.
Wroblewski worked with Melinda French Gates to start Pivotal Ventures. For Wroblewski, it was her dream job as she got to lead venture capital investment strategy for five years. One of the focus areas at Pivotal was around caregiving innovation and American family homes.
Wroblewski cites a report from one of Magnify's partners that estimates the care economy at $648 billion in the United States, already larger than the pharmaceutical market. Wroblewski's fund is writing up to $2.5 million checks into companies that will transform life, work and care for modern families.
"I started to see what I thought was a very exciting and still overlooked category of investment in venture capital around the care economy, and family-focused technology and was also seeing a lot of flow and founders," said Wroblewski.
As an investor, she is particularly interested in tools like household optimization that help families be both more efficient and joyful. She also wants to let parents know they don't have to be experts. Technology can help give them access to what they need, when they need it.
"Technology is moving closer into our lives all the time and solving increasingly human, complex, difficult problems, including, how we care for and manage care for children and our loved ones--the things that are most personal to us," said Wroblewski.
"We've seen such a wave of technology innovation in the workplace. You know, we now use so many different tools to help increase our productivity at work, to improve our health and well being in some cases in the workplace," she added. "And I think we haven't yet seen the same sort of investment in innovation move into some areas of family life and household management. And so I think that that's going to change."
dot.LA Audience Engagement Intern Joshua Letona contributed to this post.
Pejman Nozad, a founding managing partner at Pear VC, joins this episode of LA Venture to discuss Pear VC's current initiatives, including its accelerator and fellowships. He's seen as one of the most successful angel investors in the area, and for good reason: he has made more than 300 investments in his lifetime.
"I'm a child of revolution and war and difficult times," said Nozad of his upbringing in Iran during the revolution.
Nozad went to college before dropping out. That's when his brother told him about his dream to go to America. After his brother was denied a visa multiple times, Nozad went himself to the embassy and got lucky; the woman in charge of the process liked him enough to approve him.
"When you're in [your] early twenties, you don't analyze much of the future. And then your risk-takers. I came to America in 1992 with $700 and I didn't speak any word of English," said Nozad.
Nozad went from working at a carwash, then a yogurt shop, to a (now famous) Persian rug store in Palo Alto. Many of his clients happened to be CEOs and venture capitalists; Nozad wanted to be part of that community.
"I was very lucky because I had access to people who normally nobody can see them, but I was hanging out with them at Sunday barbecues while selling carpets," said Nozad.
In his early days as an investor, Nozad bet on companies that included Dropbox and DoorDash. He said he took inspiration as a venture capitalist in lessons he learned from his time playing professional soccer in Iran.
"In soccer, you can score minute one, or you can score at minute 90. Both of them [are] one goal and you can win the game. So, when you go to fundraise, don't get disappointed if you hear a lot of nos, because the yes could be the last meeting after the whole two months," he said.
dot.LA Engagement Intern Joshua Letona contributed to this post.
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