New banks

New challenger bank Dave now worth $1 billion after recent investment

  • With an investment from Norwest, Dave hits unicorn valuation.
  • The company still needs to prove it can move PFM users to become banking customers.
New challenger bank Dave now worth $1 billion after recent investment

Dave, the personal finance manager turned challenger bank, landed a $50 million investment from Norwest, valuing the company at $1 billion, according to TechCrunch.

The low down: Dave made a name for itself as a PFM that garnered 3.5 million users relatively quietly.

  • Budgeting focused: Part of Dave’s early appeal was the firm’s use of AI to help users understand their budget and $75 worth of overdraft protection to provide users an extra cash cushion to avoid fees.
  • Launching banking services: In June 2019, the company launched banking services with Evolve Bank and Trust to provide users with added banking functionality like a checking account and extended overdraft protection to $100.
  • Using PFM as the hub: Dave’s free PFM serves as a hub to acquire new users that can then be upsold to open a bank account. The company announced it now has 4 million PFM users, up from 3.5 million in June.
  • Banking slowly rolling out: The company also said it has 800,000 on a waiting list for its banking offering.

US market warming up: Dave joins a relatively crowded US market for digital banking which has some incumbents, startups, and ancillary players vying for marketshare.

  • Chime rings the bell: Chime is the player to beat now in the upstart banking market in the US. In September 2019, the company announced it has 5 million accountholders and introduced its own form of overdraft protection.
  • The Europeans are (still) coming: Most of the major European challenger banks have communicated an interest to launch in the US. So far, N26 is really the only consumer-oriented international challenger that has launched publicly in the US.
  • Go deeper: Tearsheet’s Outlier members can track the growth of challenger banks here
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