The story of how Dave took the long road to become a neobank

Q&A with Dave founder Jason Wilk

Right before the Silicon Valley Bank meltdown, I had a conversation with Jason Wilk, founder and CEO of neobank Dave, about that company’s business. I was intrigued because the neobank — which counted Mark Cuban as one of its investors as a private company — took what some might say was a backward route to becoming a neobank. Rather than start out offering checking and savings, it worked its way there. And the strategy seems to have paid off for the fintech company, which went public in January of 2022. It recently reported 45% higher GAAP revenue of $59.6 million for the fourth quarter of 2022, up 45% from the same period the year prior. Here are excerpts of my interview with Wilk, which have been edited for brevity and clarity.

Into the future

JW: This is a challenging place for growth companies, who may have access to more capital to eventually get it because the cost of capital is a lot more expensive due to the interest rates.

That’s one of the reasons why our stock has come down so much — given we are not yet profitable, although close to it. The benefit of higher interest rates for customers is that they can earn higher interest on savings and deposits, and we do benefit from that as well, as we can earn extra income from the higher rates. But I’d say overall that the highest interest rate environment is more negative than positive on the business.

What happens next?

Last year we were 8 to 10 quarters out. Now we’re 4 to 6 quarters away from when we expect the company to be profitable. We were before in 2018 and 2019, so we’ve been there before. We’ve added a sufficient amount of staff to build our future roadmap and have 1.9 million monthly transacting members on to Dave. We need to get 2.2 million to 2.4 million customers to get to profitability/break even. We don’t need to raise capital or any other liquidity.

How does AI come into play with all of this?

We’ve gotten really good with our AI engine, which is able to very accurately detect somebody’s income and understand how risky it might be to give somebody the money before they get paid. And because of that AI engine, we’ve gotten default rates down to about 2%. And we’ve been able to increase the amount of money we give away so it’s just gotten a lot better over the years.

We also use AI with customer support, over 50% of our support responses are with a chatbot. That also brings down costs. We have 320 employees and most banks have over 100,000 employees. Higher headcount often leads to higher prices for consumers.