Dave, a banking app backed by Dallas Mavericks owner Mark Cuban, is planning to go public through a business combination with Chicago-based global investment firm Victory Park Capital's special purpose acquisition company, VPC Impact Acquisition Holdings III, Inc.
Special purpose acquisition companies, or SPACs, are shell companies that have no active business operations but are listed on major exchanges where investors can buy shares. They use funds raised by their sponsors and investors to acquire other companies.
Dave, founded in 2017, is a financial platform that assists about 10 million customers with banking, financial insights, overdraft protection, building credit and finding side gigs.
To date, Dave estimates that it has helped its customers avoid nearly $1 billion in overdraft fees through its flagship feature, ExtraCash, and earn over $200 million in income through its gig-economy job board, Side Hustle. In December 2020, the company launched Dave Banking, a spending account and debit card with no monthly fees, which has already accumulated more than 1.3 million members.
"We believe the legacy financial system has failed to deliver and today, more than 150 million people need our help to build financial stability," Dave CEO Jason Wilk said in a statement. "Dave is upending the banking industry with our suite of breakthrough financial products and making a meaningful impact on our customers’ lives. This transaction and continued support from our longstanding investors signify confidence in our strategy, vision and the significant growth opportunities ahead."
Ticker Security Last Change Change % VPCC VPC IMPACT ACQUISITION HOLDINGS III INC. 9.88 -0.01 -0.10%
Victory Park Capital recently provided a $100 million credit facility to the company in January 2021. VPC Impact Acquisition Holdings III (VPCC) completed an initial public offering in March 2021.
"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," Brendan Carroll, co-CEO of VPCC and senior partner and co-founder of VPC, added. "With its strong management team, differentiated product suite and immense brand affinity, we believe Dave is well-positioned to achieve future growth and continue to disrupt the legacy financial system."
Following completion of the transaction, the combined company will trade under the ticker symbol DAVE and is expected to have an equity value of approximately $4 billion.
It is also expected to result in over $375 million in cash on the company's balance sheet, including a contribution of up to $254 million of cash held in VPCC’s trust account and a $210 million concurrent private placement led by Tiger Global Management with additional participation from Wellington Management and Corbin Capital Partners.
In addition to Cuban, the company is backed by Norwest, Section 32, Capital One, The Kraft Group, SV Angel and The Chernin Group. The company’s board of directors includes Wilk, Cuban, Metromile CEO Dan Preston, Google Ventures Founders Bill Maris, and Norwest Venture Partners' Parker Barrile.
The business combination has been unanimously approved by the Boards of Directors of Dave and VPCC. The transaction, which is subject to regulatory and VPCC stockholder approval, is expected to close late in the third quarter or the fourth quarter of 2021.