Dave
A Dave user accesses his banking account through the app.
- Dave, a Mark Cuban-backed fintech firm that prevents overdrafts by providing small, interest-free cash advances, launched a new checking account product on Tuesday.
- Dave also said it had raised $110 million in debt led by Victory Park Capital.
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Let's say you're a new college graduate who has hit pause on your student loan payments for a little too long, or ran out of money to pay a winter heating bill. Your credit score has taken a hit. Now your low score is haunting you and making it near impossible get a loan or credit card.
Dave, a fintech company that helps customers avoid overdrafts by providing small, interest-free cash advances, thinks it may have a solution.
The Los Angeles-based company, backed by investors including Mark Cuban, the DJ Diplo, and hedge fund Mark 2 Capital, said on Tuesday it's rolling out a new checking account product that reports all rent payments to credit agencies. The new feature, added to Dave's original app, helps customers to build their credit. Dave plans to begin reporting utility payments later this summer.
Dave also said Tuesday that it's raised $110 million in debt led by Victory Park Capital, bringing its total fundraising to $136.3 million of funding with a mix of debt and equity.
Dave's credit-building feature is provided by an exclusive partnership with CreditPop, a company that reports a tenant's rent payments to credit bureaus in order to build their credit. CreditPop charges $120 a year for the service, but Dave is providing it for free to any customers who directly deposit their paycheck into their Dave account.
Dave is entering a growing field in the checking account space - UK digital bank Monzo announced its US launch last week, joining US competitors like Chime and Varo. In a survey earlier this year, large banks rated challenger banks as the biggest disruptive threat to their business.
But the Dave app already has a head start. It was ranked as the 14th most popular app on the Apple App store and the 12th most popular on the Google Play store as of Tuesday.
Dave's app also provides users with a forecast of what their account balance will look like before next payday by analyzing their monthly bills. For example, if a user's bank account says that they have $1,700 in their account on Monday, but their $1,500 rent will be coming out on Wednesday, the app will send an alert that they only have $200 to spend until payday on Friday.
Dave's short term-cash advances also allow customers to borrow up to $100 every pay-period without any interest. After depositing $100 in their account, the app removes the $100 the customer borrowed out of their next paycheck, and asks the customer if they want to leave an optional tip.
Users can also access a list of available gig-economy jobs in their area within Dave, and then can click on a list of links in their app that will begin the process of signing the user up for the job. Dave is partnered with 20 companies, including Instacart. Natalie Rix, Dave's communication director, said that over 200,000 Dave users have already used the app to connect with gig-economy employers.
Jason Wilk, Dave's founder and CEO, told Business Insider that the company has had its most success with young users who are beginning to make their own financial decisions.
"We think we have built the ultimate brand loyalty product," said Wilk. "We help to avoid overdraft fees, we help them with budgeting and help them find a job."
"We view checking as one piece of an overall product, not something that needs to be just a standalone business," said Wilk.